China‘s factory output has exceeded expectations, growing 6.1% year-over-year in April despite the ongoing trade war with Washington. According to the National Bureau of Statistics (NBS), the reading was higher than the 5.7% forecast in a Bloomberg survey, but still lower than the 7.7% jump recorded for March. “The national economy withstood pressure and grew steadily in April,” the NBS said, acknowledging a “complex situation of increasing external shocks and layered internal difficulties and challenges”.
This growth comes after China and the United States agreed to slash sweeping tariffs on each other’s goods for 90 days, raising hopes the global economy can avoid a major downturn. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, noted that “economic activities softened only marginally in April as exports stayed resilient despite higher US tariffs”. Zhang expects exports to remain strong now that tariffs have been cut significantly, adding that “economic momentum in the second quarter will likely be stable”.
However, China’s economy still faces challenges, including a persistent slump in domestic spending, which threatens its official growth target for this year of around 5%. Retail sales grew 5.1% year-on-year last month, short of the 5.8% growth forecast by Bloomberg, and marking a slowdown from March’s 5.9% growth. The surveyed unemployment rate edged down slightly to 5.1% from 5.2% in March.
The property market, once a key engine for China’s economy, continues to experience a downturn, with prices of new residential properties contracting in 67 out of 70 surveyed cities in April. This reflects continued consumer caution. Despite these challenges, China’s manufacturing sector has demonstrated resilience, with some analysts attributing this to government support through tax incentives and infrastructure investments.
China’s ability to maintain production amid tariff threats offers both risks and opportunities for corporations. Companies reliant on Chinese manufacturing must weigh cost increases against stable supply chains. The depreciation of the Chinese yuan has made exports competitive, helping manufacturers offset US tariffs. As the global trade landscape remains in flux, China’s manufacturing industry will likely continue to play a significant role in shaping international economic policy.