China's economy showed signs of slowing in April as rising trade tensions and uncertainty weighed on business and consumer confidence, according to the latest analysis by ING. The bank's Chief Economist for Greater China, Lynn Song, notes a general cooling across several key economic indicators, including property, retail, investment and production, though manufacturing has proved more resilient than expected.
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Property market still seeking a floor
China's property market continued to weaken in April, with national home prices falling further. New home prices dropped -0.12% month-on-month, and existing home prices fell -0.41%. These figures represented a slightly deeper decline than in March. 'Establishing a trough on a national level is taking some time, as the recovery of the property market remains uneven and gradual,' ING noted.
Only 25 of 70 cities recorded stable or rising new home prices, down from 28 in March. The secondary housing market struggled more significantly, with just 6 of 70 cities showing price stability or growth. 'The health of the secondary market is arguably more important in terms of stabilising domestic household confidence, as these are the assets on household balance sheets,' the report said.
Retail sales growth decelerates, but select categories shine
Retail sales rose 5.1% year-on-year in April, below the 5.9% growth in March and under expectations. While overall growth softened, some categories outperformed due to favourable trade-in policies. Household appliances surged 38.8% year-on-year, communications equipment rose 19.9%, and gold and jewellery jumped 25.3%. Furniture and recreational goods also saw double-digit gains.
Manufacturing holds up despite tariff pressures
Industrial production grew 6.1% year-on-year in April, down from 7.7% in March but in line with forecasts. Manufacturing output specifically rose 6.6%. Despite tariff concerns, the impact was limited, with the textiles sector showing the clearest signs of strain, slowing to 2.9% growth from 6.5% in the first quarter.
'Tariffs will have an outsized impact in areas where there is an easy alternative, but many products that China manufactures don't have easily available alternatives,' said Song. 'Exports and manufacturing of these products could stay sticky for some time.'
Outlook stable despite volatility
Overall, ING described April's data as "a mixed bag," with trade tensions acting as a headwind to confidence. 'The immediate impact of the escalated trade war may have more of a direct impact on sentiment and confidence,' Song noted. Despite challenges, the bank recently upgraded its GDP forecast for China to 4.7% year-on-year, stating that 'risks to this outlook appear to be broadly balanced at this stage.'
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