Warning For Chinese Economy? Shoppers Fail To Keep Pace With Factory Output

BY Benzinga | ECONOMIC | 05/17/24 01:08 AM EDT

In April, China’s retail sales growth decelerated while industrial activity remained robust, according to data released on Friday by the National Bureau of Statistics.

What Happened: Retail sales in April increased by 2.3% year-over-year, falling short of the 3.8% forecasted by a Reuters poll. This growth was also slower than the 3.1% reported in March.

On the other hand, industrial production surged by 6.7% in April, surpassing the anticipated 5.5% growth and marking a significant increase from the 4.5% in March.

Fixed asset investment for the first four months of the year rose by 4.2%, lower than the expected 4.6% increase. Real estate investment, however, saw a steeper decline, down by 9.8% year-on-year for the first four months of 2024.

Despite the overall slowdown, retail sales grew by 6.8% year-on-year during a recent holiday period from Apr. 29 to May 3, according to China’s Ministry of Commerce.

Alibaba Group Holding Limited is trading at HK$ 85.15 on the Hong Kong Stock Exchange, marking a 6.84% increase. JD.com, Inc. is trading at HK$ 132.90, with a slight rise of 0.38%. Additionally, PDD Holdings Inc. is trading at HK$ 143.38, also up by 0.36% after the data release.

Meanwhile, key China-focused ETFs such as KraneShares CSI China Internet ETF (KWEB) , KraneShares Bosera MSCI China A 50 Connect Index ETF , iShares MSCI China ETF (MCHI) , and iShares China Large-Cap ETF (FXI) have outperformed major U.S.-equity ETFs, signaling a potential shift in the market landscape.

See Also: China Urges Tech Giants To Shift Away From Nvidia And Other Foreign Chip Makers, Boost Domestic AI Chip Purchases: Report

Why It Matters: The recent data release indicates a mixed picture for China’s economic growth. The slowdown in retail sales growth could be attributed to the cooling real estate market and the impact of the May 1 Labor Day holiday.

Despite these challenges, China’s economy is showing resilience. The country’s official GDP grew by 5.3% in the first quarter of 2024, surpassing expectations. This growth was attributed to the stabilization of the property sector and improving external demand, as forecasted by the ASEAN+3 Macroeconomic Research Office.

Despite the economic growth, Chinese exporters are facing a host of challenges, including a decline in exports in dollar terms and a drop in producer prices.

Amid these challenges, JPMorgan’s Jamie Dimon has urged for full engagement with China, emphasizing the need for a nuanced approach to the country.

Read Next: David Tepper Bullish On China: Alibaba Now No. 1 Holding, Trimmed Stakes In Nvidia, Microsoft, Amazon, Meta, Google

Image Via Shutterstock

This content was partially produced with the help of?Benzinga Neuro?and was reviewed and published by Benzinga editors.

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