China’s economic growth lost momentum in April as industrial output, retail sales and investment activity weakened amid rising energy costs linked to the Iran conflict and continued softness in domestic demand, according to data released by China’s National Bureau of Statistics (NBS) on Monday.
Industrial output rose 4.1% year-on-year in April, slowing sharply from March’s 5.7% growth and marking the weakest expansion since July 2023. The figure also fell short of market expectations of 5.9%, according to a Reuters poll.
The slowdown highlighted growing pressure on the world’s second-largest economy as higher energy prices threaten to squeeze factory margins and dampen consumer spending. Despite these headwinds, stronger exports and China’s fuel-pricing controls have helped cushion the impact of the Middle East conflict so far.
According to Reuters, exports accelerated in April as manufacturers rushed to meet rising demand from artificial intelligence-related industries and overseas buyers seeking to stockpile components amid concerns that the Iran war could further disrupt global supply chains and raise input costs.
Economists said export resilience partially offset weakness in domestic consumption, though not enough to fully stabilise growth momentum.
Retail sales, a key gauge of consumer demand, rose only 0.2% in April, slowing sharply from 1.7% growth in March and recording the weakest increase since December 2022. The reading was also significantly below expectations for a 2% rise.
Weak household spending remained a major concern. Domestic car sales fell 21.6% year-on-year in April, extending a seven-month decline, even as Chinese automakers intensified efforts to expand overseas markets to compensate for sluggish demand at home.
Analysts noted that consumers continue to prioritise selective discretionary spending and smaller lifestyle upgrades while avoiding large purchases tied to housing and credit conditions.
Investment activity also deteriorated. Fixed-asset investment contracted 1.6% in the January-April period, reversing the 1.7% growth recorded in the first quarter and missing forecasts for a 1.6% increase.
Economists attributed the slowdown partly to weaker construction activity and heavy rainfall in parts of southern China, which disrupted projects and infrastructure work.
The latest data suggested that China’s stronger first-quarter performance may already be fading. The economy had expanded 5.0% in the January-March period, placing growth at the upper end of Beijing’s full-year target range of 4.5% to 5.0%.
The figures were released shortly after U.S. President Donald Trump concluded his state visit to China last week. While the visit helped ease tensions between the world’s two largest economies, substantive progress on trade and investment issues remained limited.
According to Reuters, China and the United States agreed to expand agricultural trade through tariff reductions and address non-tariff barriers and market access concerns, but broader economic disagreements persisted.
China’s prolonged property market downturn also continued to weigh on the economy, with property investment contraction worsening in April. At the same time, the Middle East conflict has increased external risks for an economy already grappling with fragile consumer confidence.
Top Chinese leaders have recently emphasised the need to strengthen energy security, accelerate technological self-sufficiency and improve control over supply chains to better withstand external shocks.
