China flag
Retail sales rose just 0.2% from a year earlier in April, the weakest increase since December 2022, according to data from China's National Bureau of Statistics.

China's economy entered the second quarter on a weaker footing, with retail sales barely growing in April and factory output cooling more sharply than expected, pointing to a widening gap in the world's second-largest economy.

Retail sales rose just 0.2% from a year earlier in April, the weakest increase since December 2022, according to data from China's National Bureau of Statistics. The figure was far below the 2% growth expected by economists and slowed sharply from March's 1.7% gain.

Industrial output grew 4.1%, down from 5.7% in March and below the 5.9% forecast in a Reuters poll. The figures point to a widening gap inside the world's second-largest economy. Exports and high-tech manufacturing remain bright spots, but household spending, property activity, and private investment continue to drag on broader growth.

The National Bureau of Statistics said total retail sales of consumer goods reached 16.49 trillion yuan in the first four months of 2026, up 1.9% from a year earlier. But April alone showed a clear slowdown, with retail sales down 0.48% from March on a month-to-month basis.

China's official release tried to frame the first four months as steady overall, but it also acknowledged a key weakness: "the domestic imbalance between strong supply and weak demand is still acute." The consumer slowdown was especially visible in big-ticket purchases.

Reuters also reported that domestic car sales fell 21.6% in April from a year earlier, marking a seventh straight monthly decline. Economists told Reuters that Chinese consumers are still spending selectively on food, clothing, communications equipment, and services, but remain reluctant to make larger purchases tied to confidence, credit, and housing. Investment also weakened.

Fixed-asset investment fell 1.6% in the January-April period, reversing from 1.7% growth in the first quarter and missing expectations for another expansion. Real estate investment dropped 13.7%, while sales of newly built commercial buildings fell 14.6% by value, according to the statistics bureau.

The industrial side also showed strain. China's industrial output rose 4.1% in April, the slowest pace since July 2023. Still, the official data showed strength in newer sectors: production of 3D printing devices, lithium-ion batteries, and industrial robots rose 50.9%, 36%, and 25.7%, respectively, in the first four months.

External pressure is adding to the domestic weakness. Reuters said higher energy costs linked to the Iran war are weighing on input costs, even as China's fuel-pricing controls and stronger exports have softened part of the shock. Exports remained one of the few stronger areas.

China's total goods trade rose 14.9% in the first four months, with exports up 11.3% and imports up 20%, according to the National Bureau of Statistics. In April, exports rose 9.8% from a year earlier.

The weak April report comes after China's economy expanded 5% in the first quarter, at the top end of Beijing's full-year target range of 4.5% to 5%, Reuters reported. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, told Reuters that policymakers may wait for second-quarter GDP data before deciding whether more stimulus is needed.

Originally published on IBTimes