China’s economic recovery has been characterized by an increase in industrial production and a slowdown in retail sales

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China’s industrial output rose more than expected last month, but retail sales grew more slowly, with weak consumer sentiment weighing on the recovery in the world’s second-largest economy.

Industrial production grew 6.7 percent year-on-year in April, official data from the Office for National Statistics showed Friday, compared with 5.5 percent growth in March and 4.5 percent growth in March from economists polled by Bloomberg.

However, retail sales grew only 2.3 percent from a year earlier, falling from analysts’ forecast of 3.7 percent and 3.1 percent growth in March, indicating that authorities need to strengthen efforts to stimulate domestic consumption.

China’s economy has shown mixed signs of recovery in recent months, with exports returning to growth in April but domestic sentiment struggling under a deep slump in the property sector.

With the People’s Bank of China set to start selling Rmb1tn ($140bn) of ultra-long bonds on Friday, the government has signaled it is ready to step up stimulus efforts. Ahead of the sale, a government adviser said the bonds aim to “fully contribute to the important role of government investment in boosting economic growth”.

China’s cabinet, the State Council, announced it would hold a meeting on Friday afternoon to address issues in the housing sector, which has suffered years of stagnation despite efforts to help debt-ridden property developers.

China’s benchmark CSI 300 index of Shanghai- and Shenzhen-listed shares fell 0.2 percent, while the Hong Kong-listed basket of developers’ Hong Kong-listed Hong Kong Mainland Properties Index slipped 0.9 percent to 0.4 percent. Cent.

Chinese policymakers are increasingly relying on investment in the industry to offset lagging growth in other sectors and ease pressure on weak property markets and deeply indebted local governments. High-tech industrial production was a bright spot in the April data release, expanding 11.3 percent from a year earlier.

But industrial policy is fueling trade tensions with China’s most important export markets, the United States and the European Union. Beijing has accused it of engaging in unfair trade practices by inducing overcapacity and flooding its markets with excessive low-cost goods.

US President Joe Biden this week sharply raised tariffs on $18 billion worth of Chinese imports, from electric vehicles to solar cells, in a pre-election effort to protect domestic jobs. The EU has also opened anti-subsidy investigations into China’s EV, wind turbine and solar panel industries.

China has warned it will respond “firmly” to the US tariffs and accused Washington of violating World Trade Organization rules.

Car production rose 16.3 percent in April from a year earlier, but sales fell 5.6 percent, which could “add fuel to the fire” of accusations of Chinese overcapacity, said Lin Chang, chief China economist at ING. He said consumption growth will be “moderate” this year as “consumer confidence has weakened”.

In other data released on Friday, property prices in so-called first-tier cities fell 2.5 percent year-on-year in April, the NBS said. Prices also fell compared to a month earlier, down 0.6 percent, down 0.5 percentage points from March.

Fixed asset investment, meanwhile, grew 4.2 percent year-on-year in the January-April period, compared with a 4.6 percent rise in a survey of Bloomberg analysts and a 4.5 percent increase in January-March.

Beijing is also trying to diversify into developing and non-Western markets, particularly as it invests in high-tech products that compete directly with those in the European Union and the United States.

Russian President Vladimir Putin was on a two-day state visit to Beijing this week, where he discussed trade, investment, defense and the war in Ukraine.

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