China’s economy experienced a record-breaking deceleration in April, as important indicators continued to indicate a combination of expansion and contraction. Retail sales, industrial production, and investment numbers swung widely. This variation paints a completely different picture—a stark and complicated economic landscape fraught with uncertainty. The most recent statewide data available indicates that the construction and service sectors experienced modest expansion. Real estate and investment were still under siege.
In April, China’s retail sales increased by only 5.1% YoY, down from 5.9% growth in March. This new trend in consumer spending could signal a broader decline in consumer confidence as Americans continue to face economic headwinds. At the same time, fixed-asset investment growth slowed to 4.0% ytd, further reflecting a growing business hesitance to make new investments in projects.
Real Estate Sector Struggles
The real estate market is arguably the most important factor influencing the Chinese economy. In April, home prices in 70 major metro areas dropped even more. New home prices fell by 0.12% m/m and existing home prices were down 0.41%. Just six of the 70 cities still experienced flat or rising existing home prices. This is a jarring contrast to March, when 14 cities had the same lack of instability.
Further compounding these concerns, real estate investment dropped 10.3% y-o-y ytd, underscoring the continued weakness in the sector. Despite all of the government’s attempts to stimulate the market, the data clearly shows continuing hesitation from both buyers and investors. Due to the real estate sector’s continued weak performance, it is still a significant drag on aggregate economic growth.
Mixed Signals from Industrial Production
April’s industrial production numbers showed a trend of 6.1% YoY, which is a decline from 7.7% in March. This recent drop poses some serious concerns over the fortitude of the nation’s continued expansion, especially in manufacturing and supply chain related fields. Even with the slowdown, manufacturing still recorded a stunning 6.6% increase year-on-year. This indicates that while the pace of broad industrial output might be slowing, other sectors are red-hot.
The textiles industry was hit particularly hard in April. Its growth rate fell to a paltry 2.9% y-o-y, a stark contrast to the 6.5% growth recorded in the first quarter of 2025. This massive drop further emphasizes the trend of generally wary consumer demand as households in China shift their spending priorities.
Automotive sales were the lone bright spot in manufacturing. That’s in contrast to a somewhat surprising increase of only 0.7% y/y in April. This prolonged stagnation indicates that the market could be nearing saturation. More and more, buyers are targeting their dollars to household appliances that have experienced strong sales growth.
Consumer Trends and Sector Performance
Even as economic signals remained grim, consumers proved particularly resilient in notable pockets and patterns. This past April, household appliance production recorded an incredible 38.8% year-on-year growth rate. This jump is a sign of continued high demand for durable goods as households route spending toward basic needs. The communications appliances industry made out well too, growing at 19.9%, a sign that consumers are continuing to innovate and invest in technology.
All other sectors posted only moderate increases. Clothing store sales were up 2.2%, beverage stores 2.9% and tobacco stores 4.0%. Sure enough, luxury segments flourished with the gold and jewelry sector growing 25.3% year on year at an incredible rate. In like manner, furniture sales increased 26.9% during this period, with sports and recreation products up an impressive 23.3%.
That beige picture—a decidedly mixed performance across the three pillars of services, manufacturing, and agriculture—dramatizes the ongoing challenges in China’s economy. As some places are prospering, an increasing number are facing desperate circumstances that threaten to undermine total recovery.