China's April Output Slows to 4.1% as Retail Sales Barely Rise 0.2%
Updated
Updated · South China Morning Post · May 18
China's April Output Slows to 4.1% as Retail Sales Barely Rise 0.2%
8 articles · Updated · South China Morning Post · May 18
China’s April data showed a broader-than-expected loss of momentum: industrial output growth slowed to 4.1% from 5.7%, while retail sales rose just 0.2% from 1.7%.
Both readings missed forecasts—5.63% for output and 2% for retail sales—as officials pointed to a volatile external environment and a still-acute imbalance between strong supply and weak demand.
Fixed-asset investment also slipped into decline, reinforcing signs that the slowdown is spreading beyond consumers to factories and capital spending.
The weaker April figures follow a relatively resilient first quarter, when GDP grew 5%, but rising energy costs and geopolitical strain from the Iran war are increasingly weighing on firms.
As the Iran war disrupts global trade, is the US-China deal a true reset or just a temporary truce?
With the global economy reeling, can Beijing mediate the Iran crisis and reshape Middle East power dynamics?
Does the Iran war's economic fallout change China's strategic calculus on a future Taiwan conflict?
China’s April 2026 Economic Report: K-Shaped Growth, Inflation Risks, and the Impact of the Iran War
Overview
In April 2026, China's economy showed a clear 'K-shaped' divergence, with some sectors like industry and exports gaining momentum while consumer demand remained weak. This split was shaped by both internal structural issues and strong external pressures, especially the ongoing Iran war, which drove up input costs and led to 'cost-push inflation.' Although factory-gate prices finally rose out of deflation, this was not due to stronger consumer demand but rather higher production costs, creating 'bad inflation.' As a result, the industrial uptick did not translate into broader economic strength, highlighting the challenges China faces in achieving balanced growth.