Dr. Henry Hao of Commerzbank observes that China's post-Q1 rebound stalled in April, with fixed-asset investment declining and industrial output at a three-year low. With retail sales scarcely increasing and youth unemployment rising, domestic consumption is still precarious. Policymakers are anticipated to remain patient and postpone targeted fiscal and monetary support until H2 unless weakness continues, even though real estate prices appear to be tentatively stabilizing.
As risks increase, growth momentum diminishes.
"As fixed-asset investment shrank and industrial output fell to a three-year low in April, China's economic recovery halted. Significant domestic weakness is highlighted by rising raw material costs and slow retail sales. Despite a minor slowdown in real estate prices, widespread family caution still exists. It is probable that Chinese policymakers would continue to adopt a patient approach, postponing focused stimulus efforts until H2.
"In April, China's economic impetus from Q1 quickly faded, revealing the enduring weaknesses of an uneven recovery. As the severe consequences of a worldwide energy crisis started to put a lot of strain on manufacturing floors, growth slowed across all of the main economic pillars. In April, industrial production fell to 4.1% year over year, the lowest level in almost three years.
"With retail sales growth in April falling to only 0.2% year over year, domestic consumption continues to be the weakest link in the recovery narrative. Due to a sharp decline in expensive, credit-intensive purchases like cars and household appliances, this reading is the worst consumer performance since the pandemic exit shock in late 2022.
"Beijing is presently adopting a cautious, wait-and-see policy approach because these real estate stabilization measures need time to permeate broader family confidence. We are maintaining our growth outlook for the time being because we anticipate that the government will intervene with targeted fiscal and monetary measures if current economic difficulties continue, even though this poor April data shows growing obstacles."
As risks increase, growth momentum diminishes.
"As fixed-asset investment shrank and industrial output fell to a three-year low in April, China's economic recovery halted. Significant domestic weakness is highlighted by rising raw material costs and slow retail sales. Despite a minor slowdown in real estate prices, widespread family caution still exists. It is probable that Chinese policymakers would continue to adopt a patient approach, postponing focused stimulus efforts until H2.
"In April, China's economic impetus from Q1 quickly faded, revealing the enduring weaknesses of an uneven recovery. As the severe consequences of a worldwide energy crisis started to put a lot of strain on manufacturing floors, growth slowed across all of the main economic pillars. In April, industrial production fell to 4.1% year over year, the lowest level in almost three years.
"With retail sales growth in April falling to only 0.2% year over year, domestic consumption continues to be the weakest link in the recovery narrative. Due to a sharp decline in expensive, credit-intensive purchases like cars and household appliances, this reading is the worst consumer performance since the pandemic exit shock in late 2022.
"Beijing is presently adopting a cautious, wait-and-see policy approach because these real estate stabilization measures need time to permeate broader family confidence. We are maintaining our growth outlook for the time being because we anticipate that the government will intervene with targeted fiscal and monetary measures if current economic difficulties continue, even though this poor April data shows growing obstacles."
