China's industrial output showed unexpected resilience in April despite escalating trade tensions with the U.S., even as retail sales, property investment, and consumption indicators painted a more fragile picture of the recovery. Industrial production rose 6.1% year-over-year, beating the 5.5% consensus forecast in a Reuters poll but slowing from March's 7.7% pace, according to data released Monday by the National Bureau of Statistics.
"April's resilience is in part a result of 'frontloaded' fiscal support," said Tianchen Xu, senior economist at the Economist Intelligence Unit, who noted the growth came despite export delivery values remaining nearly stagnant. Beijing's push to offset trade pressures through targeted stimulus appears to have bolstered factory output even as overall demand faltered.
Retail sales rose 5.1% in April from a year earlier, falling short of expectations for a 5.5% increase and marking a slowdown from March's 5.9% growth. Analysts attributed the decline to continued consumer caution and fallout from high U.S. tariffs. "We suspect that the trade war has made households more concerned about their job prospects and therefore more careful about their spending," said Julian Evans-Pritchard, head of China Economics at Capital Economics.
China's economic performance remains uneven, with housing and fixed investment under particular strain. Property investment dropped 10.3% in the first four months of the year compared to the same period in 2023, while fixed-asset investment rose just 4%. New home prices slipped, reinforcing broader concerns about consumer sentiment and wealth erosion.
"The current overall price level is low, which puts pressure on production and companies' operations and affects jobs and incomes," said statistics bureau spokesperson Fu Linghui. The consumer price index fell 0.1% in April, reflecting weak domestic demand and heightening deflationary risks.
China's blue-chip CSI300 Index declined 0.4% Monday, while the Shanghai Composite lost 0.1%. The yuan also weakened against the dollar. Commodity sectors showed additional softness, with daily crude oil processing down 4.9% from March and crude steel output falling 7% month-on-month.
Despite external shocks, China's government remains optimistic about achieving its 5% growth target for the year. Authorities are relying on a combination of stimulus measures-including interest rate cuts and liquidity injections-introduced earlier this month to stabilize growth, employment, and market sentiment.
A temporary 90-day truce in the trade war, agreed last week in Geneva by Chinese and U.S. officials, has eased immediate tensions. Fu called the agreement "conducive to the growth of bilateral trade and the recovery of the world," though economists remain cautious about the outlook beyond the short-term pause.
"Even if the tariff rollback proves durable, wider headwinds mean that we still expect China's economy to slow further over the coming quarters," said Evans-Pritchard. "Export-driven gains in factory output could continue... but this is coming at a persistent deflationary cost," added Louise Loo of Oxford Economics.
