China’s economic recovery faces pressure from sluggish consumer and export demand, a government official said Tuesday, after retail sales and other activity in April were weaker than expected.
Chinese activity accelerated while U.S. and European economic growth is cooling following interest rate hikes to extinguish inflation. But consumer spending, an important economic engine, is taking longer than expected to recover after most Chinese curbs on business activity and travel ended in December.
“The recovery of demand is still insufficient,” said Fu Linghui, spokesperson for the National Bureau of Statistics, at a news conference. “External demand has weakened” and exporters face a “complex and severe” environment.
Growth in retail sales accelerated to 18.4% over a year earlier in April, official data showed, but that was below private sector expectations of up to 35%.
Factory output rose 5.6% but was off 0.5 percentage points from March. Investment in factories, real estate and other fixed assets rose 4.7% in the first four months of 2023 but slowed from the first quarter’s 5.4% growth rate.
Economic growth accelerated to 4.5% over a year earlier in the three months ending in March from the previous quarter’s 2.9%. The economy will have to grow faster in coming quarters if it is to hit the ruling Communist Party’s annual target of “around 5%.”
“The bulk of China's rebound is now behind us,” Capital Economics said in a report. “The challenging global picture will prevent much pick-up in Chinese exports.”
