BEIJING: China’s factories slowed their output growth in April and retail sales significantly missed expectations as officials warned of new problems affecting the recovery in the world’s second-largest economy.
While China’s exporters are enjoying strong demand, global supply chain bottlenecks and rising raw materials costs have weighed on production, cooling the blistering economic recovery from last year’s Covid-19 slump.
Factory output grew 9.8% in April from a year ago, in line with forecasts but slower than the 14.1% surge in March, National Bureau of Statistics data showed on Monday. Retail sales, meanwhile, rose 17.7%, much weaker than a forecast 24.9% uptick and the 34.2% surge in March.
NBS spokesman Fu Linghui said while China’s economy showed a steady improvement in April, new problems are also emerging, notably the rise in international commodity prices.
“The foundations for the domestic economic recovery are not yet secure,” Fu told a news briefing in Beijing on Monday.
China’s factory price inflation hit its highest pace since October 2017 in April. That could rise further in the second and third quarters, according to a report from the central bank last week.
The slower growth rates in the April activity indicators were also due in part due to the fading base effects as year-on-year comparisons rolled away from very sharp declines seen when the coronavirus shut down much of the country in early 2020.
In the factory sector, motor vehicle production growth fell sharply to 6.8% from 69.8%, due in part to the base effect as well as critical shortages of semiconductors used in car systems.
Growth in the production of cement slowed in April, and coal production fell on year, although aluminium and crude steel output hit record highs, helped by firm demand.
Home appliances sales growth dropped particularly sharply in April from the month before, falling from 38.9% growth on year in March to 6.1%, NBS data showed. China’s economy expanded by a record 18.3% in the first quarter and many economists expect growth will exceed 8% this year.
Exports accelerated in April, thanks to strong demand for Chinese goods amid a brisk US economic recovery and stalled factory production in other countries.
However, April also saw factory activity slow amid supply bottlenecks and rising costs and policymakers have acknowledged some of the recent weaknesses seen in the economic recovery.
The activity indicators on Monday also showed fixed asset investment increased 19.9% in the first four months from the same period a year earlier, slowing from January-March’s 25.6% increase.
Growth in real estate investment, property sales by floor area and new construction starts by floor area all cooled in the first four months compared to the first quarter, NBS data showed, amid increased scrutiny from policymakers on developers’ financing activities.
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