Fixed-asset investment unexpectedly shrank 1.6% in the first four months of 2026 from a year earlier, after rising 1.7% in the first quarter. Retail sales missed forecasts and rose just 0.2% in April, according to data released by the National Bureau of Statistics on Monday.
Industrial production also grew more slowly than expected at 4.1% last month — the weakest in almost three years. The surveyed urban jobless rate eased to 5.2%, after hitting a one-year high of 5.4% in March.
“China still looks like a two-speed economy: strong in strategic manufacturing and exports, but weak where household confidence matters most,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “The concern is not just that activity is missed, but that the weakness is broadening across the domestic side of the economy.”
The reading for retail sales was the worst since they contracted in December 2022, when China reopened from COVID and mass infections spread. Not a single economist surveyed by Bloomberg had predicted as pessimistic a reading for industry, retail sales and investment.
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The disappointing performance of the world’s second-biggest economy last month came after soaring trade — propelled by the global artificial intelligence investment boom — kept growth on track to meet the 4.5% to 5% target pursued by Beijing.
Booming exports have been shielding China from the fallout of the Iran war, even though the adverse consequences of higher oil prices are playing out on factory floors as manufacturers cope with surging raw material costs.
“China’s economy kept stabilising and improving,” the NBS said in a statement. “But we also need to see that the external situation is complex and changing, and the problem of strong supply and weak demand is still prominent. Some companies are having difficulty in operation.”
Reaction in markets was relatively muted after the data release.
The offshore yuan slipped 0.1% to touch 6.8215 per dollar, its weakest in nearly two weeks. The yield on the government’s benchmark 10-year debt held steady at 1.76%, while futures on 30-year bonds narrowed their loss.
“The economic activities are weaker than the market expected in April,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management. “The strong performance of the exporters helped to mitigate the weaknesses in domestic demand, but not enough to fully offset it.”
Chinese policymakers have appeared to be taking a wait-and-see approach to the two-speed growth phenomenon after years of efforts to coax consumers back into shops delivered only marginal gains.
The government pulled back on fiscal spending in March, while the central bank has steered clear of even hinting at any further loosening in policy, amid ample market liquidity and weak demand for credit.
China’s latest property sales data was a rare upbeat statistic reported on Monday. Resale home values, which are subject to less government intervention, decreased last month at the slowest pace since March 2025.
