Fixed-asset investment unexpectedly contracted by 1.6% in the first four months of 2026 compared to the previous year, following a 1.7% increase in the first quarter. Retail sales fell short of expectations, rising only 0.2% in April, according to data released by the National Bureau of Statistics on Monday.
Industrial production also grew more slowly than anticipated, at 4.1% last month—the slowest rate in nearly three years. The urban jobless rate declined to 5.2%, after reaching a one-year high of 5.4% in March.
“China appears to be a two-speed economy: robust in strategic manufacturing and exports but faltering in areas critical to household confidence,” stated Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “The concern is not just the activity missed, but that the weakness is spreading across the domestic economy.”
The retail sales figure was the lowest since they contracted in December 2022, following China’s reopening from COVID and a surge in infections. No economist surveyed by Bloomberg had anticipated such dismal readings for industry, retail sales, and investment.
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The disappointing performance of the world’s second-largest economy last month followed a surge in trade—boosted by the global artificial intelligence investment boom—that kept growth on track to achieve the 4.5% to 5% target set by Beijing.
Booming exports have been insulating China from the repercussions of the Iran war, even as the negative effects of rising oil prices are felt on production floors as manufacturers grapple with soaring raw material costs.
Market reactions were comparatively subdued following the data release.
The offshore yuan fell 0.1% to 6.8215 per dollar, marking its lowest point in nearly two weeks. The yield on the government’s benchmark 10-year debt remained stable at 1.76%, while futures on 30-year bonds slightly narrowed their losses.
“Economic activities were weaker than the market anticipated in April,” noted Zhang Zhiwei, chief economist at Pinpoint Asset Management. “The strong performance of exporters helped alleviate some domestic demand weaknesses, but not sufficiently to offset them entirely.”
Chinese policymakers seem to be adopting a wait-and-see approach to the two-speed growth dynamic after years of attempts to encourage consumer spending that yielded only modest improvements.
The government reduced fiscal spending in March, while the central bank has refrained from signaling any further policy easing, given the ample market liquidity and weak demand for credit.
A rare positive statistic in China’s latest property sales data was reported on Monday. Resale home values, less influenced by government intervention, decreased last month at the slowest rate since March 2025.
