China Foreign Direct Investment (USD bn)

Foreign Direct Investment in China

The economy accelerated in Q1 on the back of the disappearing impact of the pandemic, with the services sector driving the recovery. However, activity appeared to lose steam at the outset of Q2 as pent-up demand faded and economic sentiment remained subdued by elevated geopolitical tensions. In April, retail sales, credit and industrial production data notably undershot market expectations, and both the manufacturing and non-manufacturing PMIs fell. In addition, in the same month, the youth unemployment rate hit a record high even as the total unemployment rate ticked down. Moreover, the real estate sector is still in the doldrums despite the rollback of property restrictions: Housing investment and sales deteriorated in April. If the disappointing start to the quarter continues, this could spur fiscal or monetary easing ahead.