In April, China’s economy exhibited signs of deceleration as President Donald Trump initiated trade wars. It was noted that retail sales, real estate, and investments fell short of economists’ forecasts.
Industrial production has also seen a slowdown, impacted by Trump’s significantly high tariffs, which rose up to 145%. The 125% retaliatory tariffs imposed by Beijing have further hampered shipping activities.
Fu Linghui, spokesperson for the National Statistics Bureau, indicated that while external pressures have intensified, the overall trajectory remains positive.
“It’s important to recognize that external uncertainties still pose risks, and we must strengthen the foundations for a continued recovery and improvement in the national economy,” Fu emphasized.
Below are some crucial indicators reported on Monday.
Retail Sales
Chinese consumers have experienced constraints following a prolonged downturn in the housing market, which has been a significant source of wealth for many households. In April, retail sales increased by 5.1% year-on-year, falling short of economists’ expectations for a 6% rise.
Hu mentioned that Beijing will persist in prioritizing job creation and boosting domestic demand.
He also highlighted the necessity of halting declining prices, as the consumer price index dipped by 0.1% in April. This type of deflation indicates weak demand and significantly contributes to consumers’ reluctance to spend, hoping for better deals in the future.
“Given that the current overall price level is low, fostering a reasonable price recovery is critical, as it impacts production, business operations, employment, and income,” Fu stated.
On the US side, consumer sentiment has seen slight improvements in May for the fifth consecutive year, but Americans are increasingly concerned that trade wars may worsen inflation.
Manufacturing
Industrial production has increased by 6.1% year-on-year, marking a deceleration from 7.7% in March, as tariffs and trade barriers negatively impact exports.
Trump’s temporary truce in the trade conflict with China has been seen as beneficial, stating it would “enhance growth in bilateral trade and reactivate the global economy.”
With tariffs suspended for 90 days to allow for consultations, businesses have rushed to meet seasonal deadlines while facing ongoing challenges.
However, even prior to Trump’s potential reelection in January, China had been under pressure from trading partners regarding its over-dependence on exports to absorb excess industrial capacity.
Moreover, prices could continue to decline if production consistently outstrips demand from enterprises and consumers.
“Considering China’s manufacturing competitiveness and orders before the end of the 90-day ceasefire, export-driven profits from factory output might persist, but this comes at a cost of ongoing deflation,” said Louise Lou from Oxford Economics in the report.
Investment and Real Estate Sales
The government reported a 4% rise in fixed asset investments related to factories and equipment in April over the first four months of the year.
However, real estate investments from January to April experienced a 10.3% year-on-year decline. New home prices have also seen reductions.
While manufacturing remains in a better position than expected, trade pressures complicate Beijing’s initiatives to stabilize housing markets and maintain economic recovery.
“It may take some time to establish a national trough as the real estate market undergoes an uneven and gradual recovery. Tariff-induced pessimism and uncertainty may have kept more potential buyers on the sidelines in April.”
Source: apnews.com