Key Takeaways:
China’s consumer spending growth nearly ground to a halt in April, slowing far more than expected and hitting its weakest pace since 2022’s Covid lockdowns, a worrying sign for the world’s second-largest economy as its property crisis deepens.
Data from the National Bureau of Statistics showed total retail sales of consumer goods rose just 0.2 percent year-over-year. This represents a sharp deceleration from the 1.7 percent growth seen in March and widely missed analyst expectations. The weak print shows that household consumption remains sluggish, undermining Beijing’s efforts to foster a domestic-led recovery.
The details of the report painted a picture of broad-based weakness. Alongside the retail sales miss, industrial production for April also underwhelmed, according to official data. The underlying numbers for foreign brands reveal the extent of the domestic demand problem. For example, while Tesla’s wholesale figures from its Shanghai factory appeared to jump 36 percent, a closer look at the data from the China Passenger Car Association (CPCA) shows this was driven by an 80 percent year-over-year surge in exports. In reality, Tesla’s domestic retail sales to Chinese consumers fell 9.66 percent from the same month last year, dropping to just 25,956 vehicles.
The dismal data puts more pressure on Chinese authorities to roll out further stimulus measures to prop up the economy. The persistent slump in the property market remains the biggest drag on consumer confidence and household wealth, and April’s data suggests that without more forceful policy intervention, a sustainable economic recovery remains elusive. The weakness has global implications, weighing on companies with high revenue exposure to China and potentially impacting global growth forecasts.
This article is for informational purposes only and does not constitute investment advice.
