On May 18, 2026, the National Bureau of Statistics released macroeconomic data for April. In April, the macroeconomy showed marked volatility and divergence: external demand remained relatively strong while some domestic demand indicators underperformed. Industrial production, investment, consumption, and social financing data broadly weakened, but price data performed well and trade maintained high growth.
Based on the above data, we offer the following four observations and reflections.
First, the current round of oil price increases has had some negative impact on China’s macroeconomy, which is consistent with historical patterns, but we expect this impact to be temporary. Over the longer term, China possesses strong resilience — and even a relative advantage — in coping with rising energy prices. Second, fiscal spending momentum has tightened at the margin since March, and the pace of local government debt resolution may be exerting some drag on credit and investment. Third, trade data show that, beyond the influence of price factors, the transition from old to new growth drivers has generated significant sectoral divergence; the rise of AI has provided important support for both domestic and external demand. Fourth, there are divergences among certain economic indicators, and it seems difficult to find consistent evidence of a clear weakening in domestic demand and production.
On May 18, 2026, the National Bureau of Statistics released macroeconomic data for April. The macroeconomy showed marked volatility and divergence: external demand remained relatively strong while some domestic demand indicators underperformed.
Production: In April, industrial value added of enterprises above the designated size rose 4.1% year-on-year, down 1.6 percentage points from the previous month. Beyond petrochemical-related industries, downstream sectors such as machinery manufacturing and food processing also recorded notable year-on-year declines.
Trade: In April, China’s exports in US dollar terms grew 14.1% year-on-year, and imports grew 25.3% year-on-year, close to Q1 growth rates and both substantially above historical norms. Rising prices and rapid growth in the AI sector jointly drove strong import and export value growth; external demand remained robust despite oil price shocks, while agricultural imports also reflected base effects from last year’s tariff shock.
Consumption: In April, total retail sales of consumer goods grew 0.2% year-on-year, down 1.5 percentage points from the previous month. Retail sales above the designated size fell 4.4% year-on-year, with broad-based declines across categories; gold, silver, and jewelry alone dragged growth down by approximately 0.6 percentage points.
Investment: In April, fixed-asset investment fell 9.4% year-on-year on a monthly basis, declining sharply from the previous month and turning negative. Manufacturing, infrastructure, and real estate investment registered year-on-year declines of -4.4%, -3.7%, and -20.1%, respectively. High-frequency data on construction starts and inventories suggest that physical investment related to infrastructure remains relatively stable, with year-on-year growth likely around 5.8%. In real estate, while investment and new starts weakened sharply, price data and secondary housing sales performed relatively well.
Financing: In April, newly added social financing totaled RMB 624.5 billion, RMB 535.4 billion less than in the same period last year; at end-April, outstanding social financing stood at RMB 456.89 trillion, up 7.8% year-on-year, slowing further from the previous month. According to the social financing statistics, RMB lending to the real economy fell by RMB 400.6 billion , RMB 489 billion less year-on-year; declines in medium- and long-term loans to enterprises and households were the main drag. Government bond financing increased by RMB 904.1 billion, RMB 68.8 billion less year-on-year; bill financing surged by RMB 1.2 trillion.
Inflation: In April, CPI and core CPI both rose 1.2% year-on-year, and PPI increased 2.8% year-on-year. CPI rose month-on-month above seasonal norms; after excluding the effects of gold, trade-in programs, and medical services, core CPI grew 0.7% year-on-year, a marginal improvement from the Q1 average. PPI accelerated upward, with the petrochemical sub-sector contributing approximately 1.6 percentage points, consistent with short-term shock estimates from our earlier CF40 Policy Brief How Crude Oil Price Shocks Transmit to China’s Macroeconomy: An Analytical Framework. After excluding oil price effects, PPI continued to improve, with AI-related industries providing significant support.
Labor Market: In April, China’s surveyed urban unemployment rate was 5.2%, down 0.2 percentage points from the previous month, returning to a broadly reasonable range.
Based on the above data, we offer the following four observations and reflections.
First, the current round of oil price increases has had some negative impact on China’s macroeconomy, which is consistent with historical patterns. However, we expect this impact to be temporary. Over the longer term, China has strong resilience to cope with — and may even enjoy a notable advantage from — rising energy prices. In April, the Brent crude oil spot price center rose further from USD 100 per barrel in March to around USD 120 per barrel; China’s petrochemical producer prices accelerated upward while industrial value added growth slowed year-on-year. Based on our earlier analysis (see CF40 Policy Brief How Crude Oil Price Shocks Transmit to China’s Macroeconomy: An Analytical Framework), the quarter following an oil price increase is indeed the period of most pronounced price rises, but the resulting demand-side shock remains limited. Historical data analysis shows that changes in industrial value added, consumption, and other variables are not statistically significant, and the price impact largely fades within six months. Therefore, we maintain that the impact of the oil price shock on China is largely short-term, and the slowdown in April’s economic data is not entirely attributable to the oil price shock. Over the longer term, abundant alternative energy sources, competitive production costs, and improved export competitiveness may help China stabilize industrial production and pricing, building competitive advantages.
Second, fiscal spending momentum has tightened at the margin since March, and the pace of local government debt resolution may be exerting some drag on credit and investment. Based on seasonally adjusted broad fiscal expenditure data, fiscal spending in March was not weak but slowed markedly compared with January–February. Against a backdrop of marginal improvement in Q1 tax revenues year-on-year, the tightening of expenditure may reflect deliberate policy adjustment. By sub-category, flexible expenditures such as urban-rural communities, agriculture-forestry-water, and transportation declined more noticeably. The slowdown in fiscal spending may be one of the key reasons for the decline in corporate credit in April.
At the same time, the pace of debt resolution since the beginning of the year has also changed notably. From January to February, special refinancing was significantly slower than in the same period last year, while March was roughly in line with last year. Beyond special refinancing, local governments also carry hidden debts that must be resolved independently. According to disclosures by the Ministry of Finance, at end-2024, the total size of hidden debt was RMB 10.5 trillion; after excluding 2025–2028 refinancing quotas, local governments are still required to independently resolve RMB 1.4 trillion. The pace of debt resolution may disrupt credit and investment growth.
Third, trade data show that, beyond the influence of price factors, the transition from old to new growth drivers has generated significant sectoral divergence; the rise of AI has provided important support for both domestic and external demand. On imports: combining volume-price data for disclosed goods and changes in dry bulk freight rates, the contribution of price factors to year-on-year import value growth is estimated at 10%–15%, with an additional 10% or so in import volume growth. Among goods with disclosed import values, AI-related items such as diode components and integrated circuits saw year-on-year import growth as high as 51%; the import value of other industrial goods (excluding AI-related and petrochemical products) was only 0.7%, still an improvement compared with last year’s baseline; for petrochemical-related goods, volume and price effects roughly offset each other, leaving a limited impact on import values.
A similar divergence was observed on the export side. Among goods with disclosed export values, AI-related exports surged significantly (almost entirely price-driven), with year-on-year growth reaching 58.8%; exports of competitive products such as automobiles and parts, ships, and mobile phones also saw clear year-on-year improvements compared with last year, with export values growing approximately 9%; exports of other lower-end industrial goods slowed notably compared with last year, while the impact of petrochemical-related products remained limited.
This indicates that, since the beginning of this year, AI has had a structural impact on both domestic and external demand. Lower-end traditional manufacturing has been lackluster, and the transition from old to new growth drivers has accelerated.
Fourth, there are divergences among certain economic indicators, and it seems difficult to find consistent evidence of a clear weakening in domestic demand and production. On the production side, the year-on-year growth rate of industrial value added fell sharply from the previous month, and year-on-year growth in manufacturing and infrastructure investment both turned negative. However, the manufacturing PMI in April remained in expansionary territory, with the production sub-index improving from the previous month; year-on-year electricity generation also improved, and high-frequency physical production data related to infrastructure maintained solid growth. On the consumption side, non-trade-in-related consumption in April weakened sharply as well; however, consumption during this May’s Labor Day holiday was reasonably solid, with both tourist trips and spending showing clear year-on-year growth. On the trade side, external demand remained persistently strong, and after stripping out price effects, domestic demand still showed resilience. CPI, PPI, and real estate prices all improved, and the RMB continued to strengthen. Taken together, these observations make it difficult to find consistent evidence of a marked weakening in domestic demand and production. The divergence between data series warrants deeper reflection.