China’s April manufacturing output, retail sales sluggish amid trade war slowdown
In April, official data revealed a deceleration in China’s industrial output and retail sales, as the ongoing trade war posed a risk to the momentum of the world’s second-largest economy. China’s April factory output and retail sales growth have decelerated, coinciding with a temporary pause in the trade war. However, the impact of tariffs on China’s economic activity has yet to cause significant pain, as industrial output fared better than forecasts and unemployment eased.
Last week, Beijing and Washington came to an unexpected agreement to reduce the majority of tariffs that have been levied on each other’s goods since early April. The 90-day pause has halted a trade war that has unsettled global supply chains and heightened recession concerns. However, the temporary ceasefire and the erratic strategy of US President Donald Trump persist in overshadowing China’s export-oriented economy, which remains burdened by 30 percent tariffs in addition to current levies.
China’s industrial output increased by 6.1 per cent compared to the previous year, according to data from the National Bureau of Statistics. This marks a deceleration from the 7.7 per cent growth observed in March, while surpassing the anticipated 5.5 per cent rise projected in a Reuters poll of analysts. In April, retail sales, which serve as an indicator of consumption, experienced a rise of 5.1 per cent. This marks a decline from the 5.9 per cent increase observed in March and falls short of the anticipated growth of 5.5 per cent. Consumption this year has been bolstered by the government’s initiative to enhance household spending, which includes a trade-in scheme for consumer goods and the distribution of consumption vouchers by local authorities. Fixed asset investment rose by 4.0 per cent in the initial four months of 2025 compared to the corresponding period a year prior, falling short of the anticipated 4.2 per cent increase. It expanded by 4.2 per cent in the first quarter.
China’s economy experienced a growth of 5.4 per cent in the first quarter, surpassing forecasts. Authorities maintain a strong belief in reaching Beijing’s growth target of approximately 5 per cent this year, even in light of cautions from economists regarding the potential impact of US tariffs on this progress. In the previous month, Beijing and Washington intensified tariffs to exceed 100 per cent through multiple rounds of retaliatory actions. The NBS data indicated that the nationwide survey-based jobless rate decreased to 5.1 per cent from 5.2 per cent in March. Anecdotally, certain factories that are heavily dependent on the US market have dispatched their workers home.
April’s economic data highlight the effects of Trump’s tariff offensive on the Chinese economy. Exports have decelerated, deflationary pressures continue to be a concern, and bank lending has decreased more than anticipated. Concerned about the detrimental impact of tariffs on economic activity, authorities earlier this month unveiled a package of stimulus measures, which includes interest rate reductions and a significant liquidity injection. The monetary easing measures were announced prior to the China-US trade detente achieved after high-stakes discussions in Geneva, signifying a notable reduction in the escalating tensions that had persisted for months. Goldman Sachs economists anticipate that the upcoming July Politburo meeting will serve as a pivotal moment for the possibility of additional easing measures.
