Chinese factory output defies tariffs, retail sales falter

Chinese factory output and retail sales present a complex narrative amid ongoing tariff tensions. Despite the imposition of substantial tariffs—predicted to remain at 30% until late 2025—Chinese manufacturing has shown resilience, with output figures indicating a defiance of these trade barriers . Analysts have noted that while tariffs threaten to stifle exports, the adaptability of Chinese factories allows them to maintain production levels, suggesting a nuanced response to external pressures . This resilience may be attributed to China's robust supply chains and diversified markets that mitigate the impact of U.S. tariffs.

China’s retail sales growth slowed in April, data from the National Bureau of Statistics showed Monday, signaling that consumption remains a worry for the world’s second-largest economy.

Retail sales rose 5.1% from a year earlier in April, missing analysts’ estimates of 5.5% growth, according to a Reuters poll. Sales had grown by 5.9% in the previous month.

Industrial output grew 6.1% year on year in April, stronger than analysts’ expectations for a 5.5% rise, while slowing down from the 7.7% jump in March, indicating the impact from U.S. tariffs was not as harsh as was being expected.

Beijing and Washington has suspended most tariffs implemented since early April for 90 days, temporarily halting a trade war that strained supply chains and raised recession concerns. Fu Linghui, a statistics bureau spokesperson, stated this de-escalation would boost bilateral trade and global recovery, citing China's foreign trade's "strong resilience and international competitiveness." However, economists caution that the temporary truce and continued unpredictability surrounding U.S. trade policy will continue to affect China's export-dependent economy, which still faces substantial tariffs beyond existing duties.

China appear to falter under the weight of these economic conditions. The grim outlook for consumer spending highlights a disconnect between industrial performance and retail activity . As factory output remains steady, consumer confidence seems shaken by both domestic economic factors and international trade tensions. This divergence underscores the complexity of China's economic landscape as it grapples with external pressures while simultaneously striving for internal growth . Thus, while factory output may defy immediate tariff impacts, the broader implications for retail sales reflect significant challenges ahead.

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Sarah H

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