China: Mixed April data signals challenges – HSBC

HSBC reviews China’s April 2026 data, noting soft Retail Sales and a sharp fall in Fixed Asset Investment alongside resilient services and solid Industrial Production. CPI remains stable while PPI accelerates on Oil and AI-related demand. Exports and Imports both show strong year-on-year gains, reflecting external AI demand and industrial upgrading despite domestic demand headwinds.

April data show resilience and soft spots

"Retail sales slowed to 0.2% y-o-y in April, mainly due to a high base from last year and some pullback in the scale of trade-in subsidies. The weakness was concentrated in goods, with auto sales (-15.3% y-o-y) the biggest drag, weighed down by the partial removal of new energy vehicle purchase tax exemptions."

"Industrial production moderated to 4.1% y-o-y in April (from 5.7% in March) largely reflecting still weak domestic demand and a stronger pass-through from higher oil costs. Instead, external demand and high-tech manufacturing were primary drivers, as seen in the outperformance in auto and electronics production, consistent with the ongoing export strength."

"CPI was broadly stable in April, up 1.2% y-o-y, with the impact of the energy shock mainly concentrated on energy components while food items turned into a drag. PPI surged to 2.8% y-o-y driven by rapid oil price pass-through, AIdemand and anti-involution measures."

"Exports rose 14.1% y-o-y in April, regaining momentum as seasonal distortions faded, with strength supported by global AI demand, China’s competitiveness in transport-related goods and lower US tariffs. Imports increased 25.3% y-o-y driven by AI-driven demand and industrial upgrading while rising energy and copper prices also pushed up their import values."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)