Beijing’s unexpected slowdown in consumer spending in April and the weaker growth in fixed-asset investment have raised concerns about the lopsided recovery of China’s economy. Retail sales expanded only 2.3%, worse than projected, while industrial output rose 6.7%, faster than expected, highlighting the country’s export-driven manufacturing sector’s continued strength. The urban jobless rate was 5%, down from 5.2% as of the end of March, but credit shrank for the first time since 2005, adding to uncertainty about the economic outlook.
President Xi Jinping’s government has signaled more support for the economy by starting to sell its $138 billion ultra-long special sovereign bonds on Friday and mulling a plan for local governments to buy millions of unsold homes. These moves have spurred expectations of monetary easing to help banks buy the notes, but other risks remain, such as tensions with foreign markets over China’s focus on ramping up its clean energy sectors and stoking fears that cheap goods are threatening jobs abroad. The Biden administration has unveiled a 100% tariff on electric vehicles, adding to these challenges for China’s future economic growth.