Chinese warns of ‘severe’ global conditions as economy shows weakness
April industrial output and retail sales growth slow as Iran crisis hits consumer confidence
China’s industrial output and retail sales growth slowed sharply last month while investment dropped as policymakers warned that geopolitical conflicts were creating a “severe” global economic environment.
Industrial production rose 4.1 per cent in April from a year earlier, official data showed on Monday, falling short of a Bloomberg poll of analysts that forecast a 6 per cent rise and last month’s figure of 5.7 per cent.
Retail sales were up 0.2 per cent year on year, little changed and lower than analyst forecasts of 2 per cent growth and last month’s 1.7 per cent.
Fixed-asset investment, meanwhile, fell 1.6 per cent between January and April, compared with a gain of 1.7 per cent the previous month and analyst forecasts of 1.7 per cent.
The gloomy economic picture offered one of the first signs that the conflict in Iran was beginning to hit China, which has sought to mitigate the impact of higher oil prices domestically through regulatory measures.
“The international environment was complex and severe, the spillover effects of geopolitical conflicts continued to emerge, global energy markets fluctuated at high levels, and the difficulty of world economic recovery increased,” said Fu Linghui, spokesperson and chief economist of the National Bureau of Statistics.
“China actively strengthened energy supply guarantees [and] implemented temporary price controls.”
China is still grappling with the years-long fallout of a prolonged property sector slowdown, which has hit household confidence and damped consumer demand. Policymakers have sought to offset the lost economic activity by investing in infrastructure and manufacturing.
A Moody’s Analytics report ahead of the release on Monday referred to “a sluggish domestic economy and subdued investor sentiment”.
Instead, state-owned enterprises have driven much of domestic spending while manufacturing growth, particularly in high-tech sectors, has undergirded industrial production.
Exports have also continued to expand rapidly in spite of US President Donald Trump’s trade war.
A truce between the two powers, which Trump and Chinese leader Xi Jinping agreed in October and affirmed last week on the US president’s two-day visit to Beijing, has helped prop up growth.
Fu of the NBS said the data showed China’s resilience but also noted that the economy was grappling with a “contradiction of strong supply and weak demand”.
“Some enterprises face operational difficulties, and the foundation for the economy’s continued stability and improvement still needs to be consolidated,” he said.
Yuhan Zhang, principal economist of the China Center at the Conference Board, said that retail sales growth in the first four months of the year pointed to weak household demand, with consumers concentrating spending on selective discretionary items such as phones rather than “broad-based consumption”.
Car purchases were down 10.6 per cent, home appliances declined 4 per cent lower and construction materials, an indicator for the property sector, shed 7.1 per cent.
“The divergence underscores a bifurcated consumption recovery: consumers remain willing to spend on smaller lifestyle and tech upgrades, but confidence in long-cycle, credit-intensive purchases tied to housing and income expectations remains subdued,” Zhang said.
He added that investment remained “state-oriented and manufacturing-centric rather than broad-based”.