Photo shows BYD’s plant producing new electric trucks in Huai’an, China, February 21, 2024.
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BEIJING — China released data Friday showing consumer demand growth slowing while industrial activity remained resilient.
Retail sales rose 2.3% in April compared with last year, according to the National Bureau of Statistics. That was slower than the 3.8% growth predicted by a Reuters poll and slower than the 3.1% growth rate reported in March.
Industrial production rose 6.7% in April from a year earlier, beating expectations for a 5.5% rise. This was also a notable increase from 4.5% in March.
But fixed investment rose 4.2% in the first four months of the year, below expectations for a 4.6% rise.
Property investment accelerated the pace of decline, down 9.8% year-on-year in the first four months of 2024.
Investment in infrastructure and manufacturing during this time has slowed slightly from levels recorded as of March.
The city’s unemployment rate was 5% in April. The bureau previously said it would release an age breakdown within days of releasing the overall data.
Retail sales rose 6.8% year on year during the recent holiday period from April 29 to May 3, according to China’s Ministry of Commerce.
Retail sales of household appliances rose 7.9% during that time and auto sales rose 4.8%, boosted by nationwide trade-in incentives, according to the ministry.
“Fundamentals of industry, exports, employment and prices have generally improved, while new drivers remain.[ing] rapid growth,” the bureau said.
Some consumers who are uncertain about their future income and other aspects will remain cautious about spending, said Bruce Pang of JLL.
But he noted that improving employment data and rising services consumption indicate retail sales could improve in the future.
The statistics bureau said in a statement that April’s numbers were impacted by the May 1 Labor Day holiday and last year’s high base.
Bureau spokeswoman Liu Aihua noted that last year, the May 1 multi-day Labor Day holiday included two days in April. This year the holiday began only on May 1st.
According to her, the real estate sector is still in a period of adaptation.
China was also due to begin a six-month program on Friday to issue decades-long bonds to finance strategic projects. Oxford Economics expects the bulk of the economic impact will not be felt until the first half of next year.
Liu noted that issuing ultra-long bonds could also help boost market confidence.
Still a mixed picture
Other data released for April showed a mixed picture of economic growth.
Exports rose 1.5% year-on-year in April, in line with expectations, while imports rose much more than expected, up 8.4%.
Another sign of stabilizing domestic demand is the rise in consumer prices last month.
However, some ex-factory prices continued to decline. New lending data for April fell to levels not seen in at least two decades, largely due to changes in how the data is measured but also due to sluggish demand from businesses and households to borrow for the future.
The prolonged downturn in the real estate sector has yet to show signs of significant improvement, with many pre-sold apartments still under construction. Over the past few weeks, more cities have eased restrictions on home purchases in an effort to support sales.
Housing policy details awaited
Representatives from the Housing Ministry, the central bank and the financial regulator are planning to hold a press conference on Friday afternoon on policies to support home delivery.
Deng Wang, chief economist at Hang Seng Bank (China), said in an interview late last month that she expects China’s property market to stabilize by the end of next year.
“It actually seems to me that this policy has succeeded, in a very brutal way, because it’s happening too quickly, because it’s essentially stopped the speculation,” she said.
While the real estate downturn has particularly hurt the middle class, she noted that the overall economy is holding up.
“Besides the quality of the data, it appears that the economy is able to offset large losses in the housing market through industrial investment and production,” Wang said. “He has demonstrated some strength in the way the Chinese economy is organized and the way its industrial policy is pursued.”
China’s official GDP rose 5.3% in the first quarter from a year earlier, beating expectations for growth of 4.6%. The country has set a GDP growth target of around 5% by 2024.
The EU Chamber of Commerce in China told reporters last week that recent economic pressures appear to be cyclical and that it is more important for foreign businesses to see an increase in domestic demand rather than industrial investment.
Retail sales rose 6.8% year on year during the recent holiday period from April 29 to May 3, according to China’s Ministry of Commerce.
Retail sales of household appliances rose 7.9% during that time and auto sales rose 4.8%, boosted by nationwide trade-in incentives, according to the ministry.