China’s economic growth loses momentum in April

China’s industrial production (y/y) grew 4.1% in April (the slowest growth in almost three years), compared with a 5.7% rise previous month and well below consensus for 6.0% growth.

Retail sales, a gauge of consumption, have disappointed by rise of just 0.2% in April (the smallest gain in 3.5 years), compared to 1.7% rise in March and strongly disappointing forecasts for 2.0% increase.

On the other hand, China’s domestic controls of fuel prices and solid exports, have partially offset negative impact from higher energy prices, but with darkened outlook in case of prolonged pressure on factories and consumer spending from no solution on the Middle East.

The April data provided initial warning momentum in China’s economic growth in the first quarter was fading, with slight optimism seen from the outcome from US President Trump’s state visit to China.

The summit of two delegations helped to ease tense relations between the world’s two biggest economies, which have agreed to expand agricultural trade through tariff reductions and tackle non-tariff barriers and market access issues, but so far without serious progress in trade and investment.

China’s economy expanded 5.0% in the first quarter of the year, fully in line with government’s 4.5% to 5.0% target range for the year, though with threats that growth may face strong headwinds if domestic demand remains weak.