China’s economic growth slowed in April, as industrial production weakened and retail sales fell to their lowest level in more than three years. The world’s second-largest economy is facing mounting pressure from rising energy costs linked to the Iran war, alongside continued weak domestic demand.
Although stronger-than-expected exports and government fuel-price controls have helped cushion the impact of the energy shock, rising production costs could further strain already thin factory profits and reduce consumer spending if the conflict continues.
Factory output grew 4.1% from a year earlier last month, compared with a 5.7% rise in March, data from the National Bureau of Statistics (NBS) showed on Monday.
Retail Sale Increased
Exports gathered pace in April as factories raced to meet a wave of orders from AI-related industries and other buyers seeking to stockpile components amid fears the Iran war could push global input costs even higher.
Retail sales, a gauge of consumption, rose just 0.2% in April, cooling sharply from 1.7% in March and sliding to their weakest gain since December 2022. The figures were also well below forecasts centred on a 2% increase.
The fragility of household consumption was underscored in April domestic car sales, which dropped 21.6% in April from a year earlier for their seventh straight month of decline, even as automakers ramped up efforts to expand in overseas markets to offset weakness at home.
Unemployment Decreased
The nationwide survey-based jobless rate nudged down to 5.2% in April from 5.4% in March.
Adding to the gloom, fixed-asset investment (FAI) contracted 1.6% in the first four months of 2026, compared with a 1.7% rise in the January-March period and a 1.6% expansion forecast.
Domestic crude steel output echoed the weak investment data, falling 2.8% from a year earlier.
China stocks looked past the weak data and were broadly flat, as investors turned their focus to escalating tensions in the Middle East and a global bond selloff.
Few Surprises From Trump Visit
The April figures offered early signs that China’s first-quarter momentum was already fading and came after U.S. President Donald Trump finished his state visit to China.
The summit delivered few surprises even as it helped ease tense relations between the world’s two biggest economies. China and the United States have agreed to expand agricultural trade through tariff reductions and tackle non-tariff barriers and market access issues, but substantive progress across trade and investment remained elusive.
(With inputs from Reuters)
