China’s April economic data falls short amid low demand, high youth unemployment

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Official figures have revealed that China’s economic data for April failed to meet expectations, with low demand and high youth unemployment contributing to an uneven recovery after the easing of strict Covid-19 regulations.

According to the National Bureau of Statistics (NBS), retail sales, a crucial gauge of domestic consumer activity, grew by 18.4% year-on-year. However, this fell short of the 21.9% predicted by a Bloomberg survey of economists reports Channel News Asia.

Despite low inflation, weak domestic demand has hindered China’s economic recovery. The government has set a growth target of around 5% for this year, the lowest in decades, with Premier Li Qiang acknowledging that achieving this goal will be challenging. Zhang Zhiwei, chief economist at Pinpoint Asset Management, said…

“The growth target for this year is set at a low level, which leaves room for the government to wait and see.”

In April, unemployment among urban 16 to 24 year olds in China reached an all-time high of 20%, as the services sector struggled to accommodate the influx of rural migrants into cities. Overall urban unemployment decreased to 5.2% in April, down from 5.3% in March.

Industrial production for April increased by 5.6%, just over half of the anticipated 10.9% growth, as factories gradually resumed full capacity following the lifting of lockdown restrictions. Fixed asset investments from January to April rose by 4.7%, falling short of the 5.7% forecast, as debt-ridden local governments were compelled to reduce spending on large infrastructure projects.

China’s central bank recently stated that the world’s second-largest economy is not at risk of deflation, after data indicated that consumer prices increased by a mere 0.1% year-on-year in April, the slowest rate since 2021.

The report reviewing monetary policy implementation in the first quarter asserted…

Consumer prices are still rising moderately and economic operations continue to improve, which does not conform to the characteristics of deflation. In the medium and long term, there is also no basis for deflation.”

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