World Economy

China’s Industrial Output Revs Up

Output at factories and workshops expanded 7% year-on-year.Output at factories and workshops expanded 7% year-on-year.

China’s industrial output beat forecasts in April but retail sales slumped, official data showed Tuesday, as the world’s second largest economy faces headwinds from its debt battle and US trade frictions.

Output at factories and workshops expanded 7% year-on-year, the National Bureau of Statistics said, beating the 6% recorded in March and the 6.4% estimated in a Bloomberg News survey, Reuters reported.

The jump in industrial activity was fueled by the easing of winter time pollution controls, said Julian Evans-Pritchard, an economist at Capital Economics. It also reflected the first full month of data not affected by China’s New Year holidays in February, which disrupt production for months.

“But there are signs in the rest of today’s data that the economy is losing momentum,” Evans-Pritchard said in the note.

The retail sector—which China is counting on to propel it to consumption-fueled development—was one area that fell short of expectations with sales growth slowing to 9.4% from 10.1% in March. The indicator fell below the 10% forecast by analysts, and reflected a broadly downward trend seen over the past 12 months.

Expansion in fixed-asset investment also sagged to 7% on-year for the first four months, from the 7.5% recorded in January to March.

“Looking ahead, domestic spending is likely to continue to soften given the headwinds from slowing credit creation,” said Evans-Pritchard.

The data comes at a time of great uncertainty for China’s export machine as political machinations in Washington threaten shipments to one of its largest markets.

President Xi Jinping’s top economic adviser Liu He will be in Washington from Tuesday until Saturday for a new round of trade negotiations with the Trump administration.

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