China's economy is stagnating: great growth under pressure!

China's economy is stagnating: great growth under pressure!

The Chinese Bureau of Statistics (NBS) recently published retail sales for April, which were below expectations at +5.1% year-on-year. That figure falls short of Reuters' forecast of a 5.5% rise and is also slower than March's 5.9% rise. In the same breath, the NBS announced that industrial production grew by 6.1% in April, also lagging behind the 7.7% growth in the previous month. Experts fear that US import tariffs will continue to affect manufacturing activities in China, such as vietnam.vn reported.

The NBS said the economy grew steadily in April despite facing both external and internal challenges. Challenging factors include a decline in investment in real estate of 10.3% and total investment in fixed assets of just 4%, below the forecast rate of 4.2%. This development is prompting Beijing to take increased fiscal and monetary policy measures to promote consumption and jobs.

Trade relations and economic outlook

Beijing is also facing a slowdown in domestic spending, threatening its growth target of around 5%. However, Pinpoint Asset Management's Zhiwei Zhang makes it clear that exports have remained strong despite higher US tariffs. Tommy Xie of OCBC Bank predicts economic growth could top 5% in the second quarter. Analysts show Chinese exports performed better than expected in April, while sales to Southeast Asia offset declines to the US. However, there was a 2.5% decline in exports to the US in the first four months, as well as a dramatic 21% drop in April.

Meanwhile, the urban unemployment rate fell slightly to 5.1% in April. Still, concerns about trade conditions remain high, particularly following tariffs the U.S. recently imposed on select Chinese products. While the agreement between the two countries on tariffs and trade conditions showed a slight easing after a meeting in Switzerland in early May, the market still remained tense.

Current market conditions

The mood on the international markets is tense. Futures point to a negative opening for European markets, with the EU50 index down over 1.5%. Additionally, the US dollar is down 0.7% and gold prices are up almost 2%, approaching $3,300 an ounce. For today in the US, retail sales and industrial production numbers are of great importance, while the Bank of Canada interest rate decision is expected at 16:45 GMT, which is expected to maintain the interest rate at 2.75%, as xtb.com reported.

Federal Reserve Chair Jerome Powell is also scheduled to speak today at 8:20 p.m. ET, which could add to market momentum. Ongoing concerns over the US-China trade war are affecting market sentiment and adding downward pressure on stock prices worldwide.