Core Viewpoint - The "expected difference" in domestic demand improvement is greater than that of external demand, driven by a longer Spring Festival holiday, continuation of national subsidy policies, and recovery of consumer confidence [7][14][95]. Consumption - In January-February, the total retail sales of consumer goods increased by 2.8% year-on-year, exceeding the expected 2.4%, with a rebound of 1.9 percentage points from December 2025. This improvement is attributed to two main factors: the longer Spring Festival holiday boosting consumption in tobacco, alcohol, and food categories, and the new round of "old-for-new" funding stimulating significant growth in home appliances and furniture [6][14][93]. - Restaurant income saw a year-on-year growth rate increase of 2.6 percentage points to 4.8%, while service retail sales also rose by 0.1 percentage points to 5.6% compared to the end of last year [7][14][93]. Investment - Fixed asset investment showed a remarkable rebound, with a year-on-year increase of 1.8% in January-February, a rise of 16.9 percentage points from December 2025, marking an unprecedented recovery. This improvement is supported by a decrease in the proportion of special refinancing bonds and enhanced cash flow for enterprises due to previous debt-clearing policies [7][17][57]. - Infrastructure investment improved significantly, rising by 20.4 percentage points to 11.4%, while manufacturing investment increased by 12.7 percentage points to 3.1%. Service industry investment also saw a notable recovery, with a decrease in the year-on-year decline to -0.6% [17][62][68]. Real Estate - Although sales, new construction, and completion rates remain low, real estate investment showed a significant rebound, with a year-on-year decline narrowing to -11.1%, an improvement of 24.7 percentage points. The sales area of commercial housing also improved slightly, with a year-on-year decline of 13.5%, up by 2.1 percentage points from December 2025 [8][29][68]. - The credit financing growth rate for real estate companies increased, contributing to the rebound in real estate investment. However, new construction and completion rates still face uncertainties, with declines of 3.7 and 9.6 percentage points, respectively [29][94]. Production - The industrial added value increased by 6.3% year-on-year in January-February, reflecting a significant rebound influenced by the "Spring Festival misalignment" and demand improvement. This increase is estimated to be boosted by 0.7-0.8 percentage points due to the holiday effects [6][37][94]. - Labor-intensive industries, such as food manufacturing and beverages, showed substantial production increases, while sectors like electrical machinery and non-metallic minerals also improved, likely due to stronger exports and investment recovery [37][94].

Core Viewpoints - The improvement in domestic demand is more significant than external demand, with a notable "expectation gap" observed in early 2026 [2][10][90] Consumption - The retail sales growth rate for January-February increased by 1.9 percentage points year-on-year to 2.8%, driven by a longer Spring Festival holiday and government subsidy policies [2][10][88] - Key categories such as tobacco, alcohol, and staple foods saw significant improvements, with year-on-year growth rates rising to 19.1% and 10.2% respectively [10][88] - Service consumption also showed positive recovery, with restaurant income growth rising to 4.8% [2][10][88] Investment - Fixed asset investment rebounded significantly, with a year-on-year increase of 1.8%, up 16.9 percentage points from the previous month, marking a historically rare rebound [2][10][13] - Infrastructure investment improved notably, with a year-on-year increase of 11.4%, while manufacturing investment rose to 3.1% [7][52][57] - The decline in real estate investment narrowed to -11.1%, reflecting improvements in corporate cash flow and a reduction in the issuance of special refinancing bonds [2][10][13] Real Estate - Despite low levels of sales, new construction, and completions, real estate investment showed a significant rebound, with sales area and amount improving slightly [3][24][89] - The credit financing growth rate for real estate companies increased, contributing to the rebound in investment [3][24][89] - However, new construction and completion growth rates remain low, indicating uncertainty in future investment recovery [3][24][89] Production - Industrial value-added growth for January-February rose to 6.3%, reflecting the combined effects of the Spring Festival timing and improved demand [2][10][32] - Labor-intensive industries, such as food manufacturing, saw significant production increases, indicating a recovery in consumer demand [32][90] - The production of intermediate and capital goods also improved, likely due to stronger exports and investment recovery [32][90] Summary - The easing of pressures from debt and real estate is expected to lead to significant improvements in domestic demand, which may represent the largest expectation gap for the economy in 2026 [4][90][41]