China Industry

Economic activity readings undershoot expectations

Latest reading: Industrial production grew by 4.1% year-on-year in April 2026, down from 5.7% in March and below the expected 5.9%. This marked the weakest pace of industrial production growth since July 2023. Growth slowed in both mining and manufacturing, while utilities output increased at a faster pace. Retail sales rose by only 0.2% year-on-year in April 2026, slowing sharply from 1.7% in March and falling well short of expectations for a 2.0% increase. This was the weakest growth since December 2022. Large-ticket purchases were particularly weak, with automobile sales falling steeply, alongside declines in home appliances, building materials, and furniture. Fixed-asset investment fell by 1.6% year-on-year in the January–April 2026 period, missing expectations for a 1.6% increase and reversing the first quarter’s 1.7% gain. Property investment remained in decline, while growth in infrastructure and manufacturing investment slowed.

Panelist insight: On the data, Nomura analysts said: “The weakness in IP growth, which is in real terms, was not a big surprise to us, as about half of headline export growth of 14.1% y-o-y in April was accounted for by surging prices of chips and electronic products. The once-again worsening domestic demand lends support to our view of a great divide which prevents Beijing from allowing a too-fast RMB appreciation. […] We believe that the AI boom alone won’t get China out of the economic woes brought about by the property bust.” ING’s Lynn Song commented on retail: “The weakness of retail sales was broad-based. There are two key themes for this month's data. The first theme is that we're now paying the price for front-loaded demand from the trade-in policy, which we have been warning about since last year. The second theme concerns a pullback in gold prices following the outbreak of the Iran war. We saw a -21.3% YoY drop in gold and jewellery sales in April, as gold prices stabilised at lower levels after falling from record highs at the start of the year.”

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