China's economy showed signs of strain in April as retail sales grew at the slowest pace since December 2022, while industrial output and investment also fell short of expectations amid the ongoing effects of the Iran conflict, according to data released Monday by the National Bureau of Statistics.
Retail sales rose just 0.2 percent from a year earlier, missing forecasts for a 2 percent increase and slowing from 1.7 percent growth in March. The figure marked the weakest performance in that category since the country began easing its Covid restrictions more than three years ago.
Industrial output expanded 4.1 percent year over year, down from 5.7 percent in March and below the 5.9 percent gain economists had projected in a Reuters poll. Urban fixed asset investment, which covers real estate and infrastructure projects, contracted 1.6 percent in the first four months of the year compared with the same period in 2025, reversing the 1.7 percent expansion seen in the January-to-March quarter.
The property sector weighed heavily on investment, with spending in that area plunging 13.7 percent so far this year after an 11.2 percent drop in the first quarter. Lizzi Lee, a fellow at the Center for China Analysis, noted that further declines in home prices could deepen the pressure on household balance sheets, given the significant job losses already felt across construction and related industries.
Separate figures showed new home prices continued to fall in April, though the pace of decline eased slightly as the multi-year property downturn persists.
"Further declines in home prices would deepen the hit to household balance sheets," said Lizzi Lee, a fellow at Center for China Analysis.
Exports provided some offset to the domestic weakness, surging 14.1 percent in April as factories rushed to meet overseas demand from buyers stockpiling goods amid fears of higher input costs tied to the Iran situation. That beat expectations for 7.9 percent growth and helped cushion the overall picture, according to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
The urban unemployment rate edged down to 5.2 percent from 5.4 percent in March, offering a modest bright spot in the labor market. Service-related retail sales, including spending on cultural, tourism, sports and entertainment activities, grew 5.6 percent in the first four months, outpacing the overall retail sales increase of 1.9 percent.
Fu Linghui, spokesman for the National Bureau of Statistics, highlighted ongoing challenges during a Monday press briefing.
"The volatility in energy markets and supply chain disruption stemming from the Middle East conflict continue to cloud the global economic recovery," Fu said, while also emphasizing Beijing's push toward renewable energy.
Crude oil refining volumes dropped 5.8 percent in April from a year earlier, the steepest decline since August 2024, even as domestic crude output rose 1.2 percent. A surge in commodity costs linked to the conflict pushed both producer and consumer prices higher, with factory-gate prices reaching a three-year high and outpacing consumer price gains for the first time since July 2022.
Tommy Xie, head of Asia macro research at OCBC Bank, observed that the Trump administration appears to be stepping back from earlier demands for deep structural reforms in China's economy.
"Washington and Beijing increasingly understand that a full-scale decoupling, or an 'uncontrolled conflict' could impose enormous costs on their own economies," Xie said in a note.
Following last week's meeting between U.S. President Donald Trump and China's Xi Jinping, Beijing agreed to purchase at least $17 billion in American agricultural products over the next three years and an initial 200 jets from Boeing. The two sides also established a U.S.-China Board of Trade and Board of Investment to address market access issues under a tariff-reduction framework.
Analysts expect Chinese policymakers to hold off on additional stimulus until clearer signs of deterioration emerge. Zhang said Beijing will likely remain in a wait-and-see mode and reassess its stance after second-quarter GDP data is released in July, following the stronger 5 percent growth recorded in the first quarter.
Despite the April slowdown, service consumption and export momentum offer some resilience, though officials have stressed the need for further efforts to strengthen domestic demand and improve product offerings to better attract consumers.