China’s factory pulse beats – But the consumer’s still in a coma

China’s April macro read was the ultimate Rorschach test—bulls saw a reaccelerating growth engine, bears saw a policy smoke show. The truth? Somewhere between a tactical export hustle and a deflating domestic tire.

Industrial output jumped 6.1% y/y, beating the tape and giving some glimmer of hope . But don’t confuse velocity with vitality—this wasn’t organic momentum. It was tariff front-running, pure and simple. Chinese factories are pulling forward orders, frantically shipping goods out the back door before Trump’s 2025 tariff wall slams shut. ASEAN trade corridors—especially Vietnam—are being used like off-ramps to dodge the levy hit. The export machine looks alive, but it’s running on borrowed time and geopolitical adrenaline.

Meanwhile, domestic demand is still face down. Retail sales clocked in at 5.1%—a miss even against already sandbagged expectations—and new home prices were as flat as a central bank rate corridor. That’s two years of dead money in the property sector, which once carried a quarter of the economy on its back. When real estate freezes, the Chinese consumer doesn’t just chill—they shut down. And that consumer is still the missing link in this so-called recovery.

This imbalance—smoking factory stacks paired with ghost malls and flatlined home prices—is a red flag for anyone pricing in a durable China reflation. The manufacturing surge is externally juiced, not internally generated. And once the pre-tariff sugar rush wears off, what’s left? Sentiment is still fragile, youth unemployment is stubborn, and private investment remains wary. The confidence crisis in property has metastasized into a broader malaise—and Beijing’s policy toolkit is looking more ceremonial than catalytic.

And let’s not forget: this was April data. The real tariff pain is still in the pipe. When Trump’s trade measures hit full stride and the front-loaded demand gets flushed out, China’s factory floor could go from hot to hollow real fast. That’s when the gap between hard data and hard reality really starts to show.

Bottom line: this isn't a recovery—it’s a performance. A paper dragon puffing smoke, not breathing fire. Markets can cheer the headline pop, but the core story is unchanged: too much production, too little consumption, and nowhere left to hide when the tariff storm makes landfall.