- China’s retail sales grew just 0.2% year-over-year in April — down from 1.7% in March and the slowest pace since December 2022 — as domestic consumption remains tepid despite robust export growth.
- Property investment fell 14% in January–April, construction starts dropped 22%, and home sales by value slid 15% — the real estate sector continues to drag on consumer and business confidence.
- Industrial output growth slowed to 4.1% in April from 5.7% in March; fixed-asset investment fell 1.6% year-over-year in the first four months.
- China reported 14% export growth in April, but the export boom is masking entrenched domestic weakness — and the Iran war threatens to curb global demand, leaving the economy vulnerable.
What Happened?
China’s economic data for April came in broadly below expectations, revealing a widening split between external and internal momentum. Retail sales rose just 0.2% year-over-year — the weakest since December 2022 — while industrial output growth slowed to 4.1% from 5.7% in March. The real estate sector remained a drag: property investment fell 14% in the January–April period, construction starts dropped 22%, and home sales by value slid 15%. Fixed-asset investment fell 1.6% year-over-year. On the positive side, exports surged 14% in April, driven by electronics and AI-related goods, helping China maintain first-quarter GDP growth of 5% in line with its official 4.5%–5% target — making large-scale stimulus unlikely in the near term.
Why It Matters?
The divergence between China’s export strength and domestic weakness is becoming a geopolitical flashpoint. The Trump-Xi Beijing summit last week celebrated “strategic stability,” but yielded few concrete deals to meaningfully rebalance bilateral commerce. China’s export machine — running hot on AI-driven electronics demand — is fueling global trade imbalances that have already triggered one trade war. Meanwhile, the Iran war threatens to depress global demand, which would undercut the very export engine keeping China’s growth on target. Higher commodity prices from the Hormuz disruption are also squeezing manufacturer profit margins and pushing factory-gate inflation to a 45-month high, threatening the investment outlook.
What’s Next?
With first-quarter GDP at 5% — on target — Beijing is unlikely to rush new stimulus despite the April weakness. The question is whether export momentum holds if the Iran war deepens the global slowdown, and whether domestic demand can find a floor as the property sector continues its multi-year decline. Watch for any shift in Chinese consumer spending data in May, and whether the agricultural purchase commitments from the Beijing summit translate into actual trade flows that provide any relief to the bilateral deficit pressure. The urban jobless rate ticked down to 5.2% in April from 5.4% in March — a modest positive but insufficient to offset the broader demand weakness.
Source: The Wall Street Journal
