China's April factory output, retail sales growth slow amid trade war pause

Growth in China's industrial output and retail sales slowed in April, official data showed on Monday, as a trade war threatened to dampen momentum in the world's second-largest economy. 

However, the impact of tariffs on China's economic activity has yet to cause significant pain, as industrial output fared better than economists' expectations and unemployment eased. 

Beijing and Washington reached a surprise agreement last week to roll back most tariffs imposed on each other's goods since early April. The 90-day pause has put the brakes on a trade war that has disrupted global supply chains and stoked recession fears. 

 

But the short-term truce and US President Donald Trump's unpredictable approach continue to cast a shadow over China's export-driven economy, which still faces 30 per cent tariffs on top of existing duties. 

China's industrial output grew 6.1 per cent from a year earlier, National Bureau of Statistics data showed, slowing from 7.7 per cent in March and exceeding expectations for a 5.5 per cent rise in a Reuters poll of analysts. 

Retail sales, a gauge of consumption, rose by 5.1 per cent in April, down from a 5.9 per cent increase in March and compared with forecasts for an expansion of 5.5 per cent. 

Consumption this year has been supported by the government's push to boost household spending, including a trade-in scheme for consumer goods and consumption vouchers distributed by local authorities. 

Fixed asset investment increased 4.0 per cent in the first four months of 2025 from the same period a year earlier, compared with an expected 4.2 per cent rise. It grew 4.2 per cent in the first quarter. 

China's economy expanded 5.4 per cent in the first quarter, exceeding expectations. Authorities remain confident of achieving Beijing's growth target of around 5 per cent this year, despite warnings from economists that US tariffs could derail this momentum. Last month, Beijing and Washington escalated tariffs to over 100 per cent in several rounds of retaliatory moves. 

The NBS data showed the nationwide survey-based jobless rate fell to 5.1 per cent from 5.2 per cent in March. Anecdotally, some factories heavily reliant on the US market have sent their workers home. 

April's economic data underscore the impact of Trump's tariff offensive on the Chinese economy. Exports have slowed, deflationary pressures persist and bank lending tumbled more than expected. 

Alarmed by how tariffs have hurt economic activity, authorities earlier this month announced a package of stimulus measures, including interest rate cuts and a major liquidity injection. 

The monetary easing measures were announced before the China-US trade detente was reached after high-stakes talks in Geneva, marking a significant de-escalation from months of mounting tensions. 

Economists at Goldman Sachs expect the July Politburo meeting to be the next critical milestone for potential further easing. 

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