China's economic activity unexpectedly weakened in April despite resilient exports, increasing pressure on Beijing to roll out more measures to aid growth.
Official data released Monday showed weakness across the board as retail sales only inched higher while industrial production disappointed expectations and fixed-asset investments fell.
Government subsidies for consumer goods this year aren't as strong as last year's, with car sales weakening visibly in April, noted Zhiwei Zhang, Chief Economist at Pinpoint Asset Management.
"The strong performance of the exporters helped to mitigate the weaknesses in domestic demand, but not enough to fully offset it," said Zhang.
China has seen solid export growth in recent months, supported by global demand for artificial intelligence and green products.
Even though China's growth momentum is sputtering, it remains unclear if policymakers will jump into action, as the solid economic performance in the first quarter and robust exports have reduced expectations for near-term stimulus measures.
Pinpoint's Zhang expects Beijing to keep monitoring the economy and reassess its policy stance in July when second-quarter data is available.
Monday's release showed April's retail sales, a gauge of consumption, rose just 0.2% compared with the same period a year earlier, slowing from March's 1.7% increase and well short of the 2.0% growth tipped by a Wall Street Journal survey of economists.
Fixed-asset investment over January-April fell 1.6% on year , missing economists' expectations for a 1.6% increase and reversing the 1.7% growth recorded in the first quarter of the year, according to the National Bureau of Statistics.
The unexpected return to a contraction was largely caused by the continued slump in China's property sector. January-April property investment dropped 13.7% on year, while construction starts fell 22.0%.
Industrial output in April rose 4.1% from a year earlier, easing from the prior month's 5.7% increase and disappointing economists' expectations for a 5.9% rise.
Monday's weak data came days after President Trump concluded talks with Chinese leader Xi Jinping in China on Friday. The world's two largest economies announced limited concrete outcomes after the summit, with both Washington and Beijing emphasizing efforts to stabilize their strained relationship.
Barclays economists told clients in a Friday note that a notable divergence persisted on core strategic interests over Taiwan and Iran, which was consistent with the limited deals achieved so far.
While China said Saturday that it had agreed with the U.S. to establish bilateral boards of trade and investment to discuss tariff reductions on certain products, the Chinese Commerce Ministry characterized the results as preliminary and cautioned that negotiators from both sides are working to finalize the details of the agreed-upon points.
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