China’s manufacturing and services activity grew at a slower pace in April, according to official data released on Tuesday. The National Bureau of Statistics’ (NBS) manufacturing purchasing managers’ index (PMI) fell to 50.4 in April from 50.8 in March, indicating a slight cooling of activity.
New export orders grew at a slower pace, while employment continued to contract, highlighting the challenges facing economic leaders in China. The services sector also saw slower growth, with the services subindex of the NBS non-manufacturing survey dropping to 50.3 in April from 52.4 in March.
Analysts say that despite the mild economic expansion, there is a need for further stimulus measures to support the economy. The divergence between the official PMI and the Caixin PMI suggests differences in geographic and sector coverage.
While China has set a GDP growth target of around 5.0% by 2024, analysts remain skeptical about a full economic revival, citing weaknesses in key areas such as retail sales, industrial profits, and real estate investment. The prolonged decline in the real estate sector and rising debt levels in local administrations have also dampened confidence among households and investors.
Krishna Srinivasan, the IMF’s Asia-Pacific director, emphasized the need for China to reduce aid to industries to address resource misallocation and overcapacity, and instead prioritize supporting domestic demand over supply-side policies.
Investors are closely watching for clues from the monthly Politburo meeting for potential economic support measures and the impact of ongoing trade tensions with the United States. Despite challenges, Chinese authorities have stressed the importance of economic development based on innovation in advanced sectors.