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China Economic Activity April 2024

China: Real-sector data for April is generally downbeat

Industrial output increased 6.7% in April, up from 4.5% in March and overshooting market expectations. April’s acceleration was due to stronger manufacturing and mining growth.

Also in April, retail sales rose 2.3% year on year, down from March’s 3.1% increase and well below market projections. Moreover, fixed investment growth in January–April was 4.2%, down from 4.5% in January–March and below market expectations, as state investment growth slowed. In addition, property indicators in April were downbeat, with double-digit year-on-year falls in property sales and property investment and a steeper decline in home prices.

The latest data points to a divide between a more solid external sector—industrial output and goods exports both beat expectations in April—and a softer domestic economy.

On the near-term outlook for retail sales, DBS analysts said:

“Retail sales growth will likely regain its momentum in May. Domestic traffic and revenue during the Labor Day holiday exceeded the 2019 level by 28% and 14%, respectively. Positive wealth effect from the rebounding stock market could be another catalyst. Potential government subsidies for consumable upgrades will lift retail sales growth in the months ahead.”

On the property sector, Nomura analysts said:

“We believe growth momentum remains weak, as the property fallout drags on. The April Politburo meeting highlighted a major shift in policy focus from public housing towards rescuing presold homes, which is fully in line with our calls and policy suggestions over the past year.”

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