Chinese stocks listed in Hong Kong reacted positively as the data added to budding optimism that Beijing’s recent efforts to boost the economy are starting to bear fruit. The Hang Seng China Enterprises Index extended gains to as much as 1.7%. However, reaction on the mainland was muted, with the CSI 300 Index failing to hold an advance. Shares traded in Hong Kong have suffered more than their onshore peers in this year’s selloff, with the HSCEI gauge slumping more than 8% in August alone.

The onshore yuan jumped as much as 0.5%, set for its best weekly advance since January, and the 10-year government bond yield amid risk-on sentiment.

“Policy tailwinds, while no massive stimulus, are gathering momentum,” said Redmond Wong, a market strategist at Saxo Capital Markets in Hong Kong. “We are calling for a rally in the equity market.”

The industrial figures were aided by a pickup in production of automobiles, which gained 4.5% in August after a decline the month before. Spending on jewellery and cosmetics also improved, contributing to the higher-than-expected data for retail sales growth.

Even so, its early days — and a single month of data isn’t enough to confirm a sustained recovery trajectory. There have been other signs that this year’s initial spurt of spending activity has begun to moderate, and the ongoing crisis in the real estate sector continues to be a challenge. That’s all added to expectations that the government’s policy push isn’t yet finished, with several economists seeing more rate cuts or other measures to come.

Not all of Friday’s figures were rosy, either: Fixed-asset investment grew 3.2% in the first eight months of the year from the same period in 2022, slowing from the increase in January-to-July as the decline in property investment worsened.

The rate of growth in infrastructure investment also eased slightly, even as Chinese provinces accelerated the pace at which they issued special bonds used to finance infrastructure projects. That suggested the funds have been slow to trickle through and impact growth.

“We also need to see that there are still a lot of uncertainties and instabilities externally, and domestic demand still appears insufficient,” the NBS said in a statement accompanying the data.

Before Friday’s indicators, earlier indicators showed manufacturing inching toward expansion last month, while credit demand recovered and deflationary pressures eased slightly.

But while consumers have been spending on services like travel and eating out, there is doubt about the sustainability of that spending. The job market outlook is also gloomy, adding to strains.

Meanwhile, a bump in home sales in big cities following the announcement last month of some property easing measures has already faded. Home prices dropped at a faster pace in August than in July.

“More property easing — mostly from local governments — is possible if sales fail to stabilise,” said Michelle Lam, greater China economist at Societe Generale SA. She noted possibilities such as completely relaxing home buying restrictions in major cities, or further reducing mortgage rates and down payment ratios.

Beijing’s willingness to help the real estate sector may be limited, according to Robert Carnell, head of research and chief economist for Asia-Pacific at ING Groep NV. The government “has done a lot already,” he said, citing efforts including lowering the barriers to purchasing homes.

“What it isn’t doing — and what I don’t think it will do — is to throw money at this to encourage people to get extra property,” Carnell said.

More likely stimulus may include additional policy rate cuts and other monetary easing to support the economy and ensure it can eventually turn a corner.

Before the data was published Friday, the People’s Bank of China cut the amount of cash lenders must keep in reserve for the second time this year and injected a net 191 billion yuan ($26.2 billion) via its one-year policy loan into the interbank market. It kept the rate on the loan steady after a surprise cut last month.

The moves help increase the ability for banks to buy bonds and support government spending. They will also make it easier for lenders to meet demand for cash in the lead up to the nation’s upcoming Golden Week holiday.

“The government will not stop beefing up policy support when the economy starts to show signs of improvement this time around,” Ding of Standard Chartered said. He pointed out that in its statement about cutting the RRR, the central bank said it intended to consolidate support for the economy so it can rebound in a sustainable way.

“Policy easing will continue for some time,” he said, expecting a 10 basis point policy rate cut in the fourth quarter.

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Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.