China's April Data Reflect Trade War Setback – ABN AMRO

China’s April Data Reflects Economic Setback Amid Trade Tensions – ABN AMRO

China’s latest economic indicators for April confirm a slowdown in activity, largely attributed to the renewed escalation of the U.S.-China trade war in March. The data, released on Monday, shows weakening momentum across industrial production, retail sales, and fixed investment — all signaling that the short-term economic outlook remains fragile despite a recent ceasefire agreement in Geneva.

According to ABN AMRO senior economist Arjen van Dijkhuizen, the April figures "captured the impact of last month's trade war escalation" following temporary improvements in March driven by frontloaded exports and government stimulus. With growth now decelerating, there are questions around how sustainable any near-term recovery will be, even with the easing of tensions.

Key figures from April include:

• Industrial Production: Rose 6.1% year-on-year, down from 7.7% in March but still above the 5.7% consensus forecast. On a monthly basis, growth was just 0.2%, down from 0.4%.
• Retail Sales: Slowed more than expected to 5.1% year-on-year (from 5.9% in March), with monthly growth also easing to 0.2%.
• Fixed Investment: Growth softened to 4.0% for the January–April period, compared to 4.2% in the previous quarter, reflecting continued pressure from China’s struggling property sector.

Van Dijkhuizen notes that while the supply side remains somewhat resilient, domestic demand continues to suffer. The property sector slump has weighed heavily on consumer and investor confidence, as well as overall economic activity. Investment in real estate and residential sales contracted further in April, indicating that the sector remains far from recovery.

Interestingly, the urban unemployment rate edged down slightly to 5.1%, an improvement from March and marginally better than expectations. Still, the job market's slight resilience hasn’t been enough to counterbalance the broader slowdown in demand.

In summary, while the Geneva ceasefire between the U.S. and China may offer some room for stabilization, ABN AMRO analysts remain cautious. "The setback in April suggests that momentum is fragile," said van Dijkhuizen, adding that any future recovery will depend heavily on the follow-through of trade negotiations and the stability of the domestic property sector.