May real-sector data largely disappoints

Industrial production grew 5.6% year on year in May (April: +6.7% yoy), undershooting market expectations. The slowdown largely reflected decelerating manufacturing and energy production. Fixed-asset investment rose at a more moderate pace of 4.0% in January– May (January–April: +4.2%), the worst result since December 2023 and also below market expectations. Investment was state-dominated, with private investment largely stagnant year to date. In addition, housing indicators such as home prices, housing sales, floor space under construction and housing investment remained deep in the red. On the flipside, retail sales growth sped up to 3.7% in May from 2.3% in April, overshooting market expectations. Retail sales were likely supported by shopping festivals and a long holiday in early May.

Commenting on industrial production, EIU analysts said: “The strong growth in industrial output showed that China's manufacturing activity is benefiting from the recovery in global demand, largely from the Association of South-East Asian Nations (ASEAN) and Latin America. Output growth in the export-oriented computer, communications and electronics sector stayed at a relatively high level (14.5%). Meanwhile, riding on the rise of tourism and normalisation of global connectivity, output in transport equipment (including railways, ships and planes) also achieved strong growth (11.8%).”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Chinese investment projections for the next ten years from a panel of 6 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable investment forecast available for Chinese investment.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Chinese investment projections.

Want to get access to the full dataset of Chinese investment forecasts? Send an email to info@focus-economics.com.