Exports. That’s all Xi Jinping’s economy has going for it.
On Monday, apparatchiks at the National Bureau of Statistics in Beijing released the monthly activity data rollup for April, and without mincing words: The figures were awful.
Headed into 2026, the Party pledged to redouble efforts aimed at resuscitating domestic demand, an increasingly urgent imperative. Household sentiment never recovered from the twin shocks of COVID lockdowns and Xi’s multi-faceted social engineering project dubbed, ironically in the context of the deleterious impact on consumer psychology, “common prosperity.”
Suffice to say the plan, to the extent Xi has one, isn’t working. Retail sales growth in April was a paltry 0.2%. That’s the worst since a contraction in late 2022, when public angst around lingering pandemic protocols threatened to manifest as social upheaval, forcing the Party to abandon virus curbs virtually overnight.
It’s difficult to overstate how disappointing this is. The figure above gives you some context.
The Party relied on a piecemeal approach to boost demand for the better part of four years — rebates, subsidy schemes and the like. All half-measures, none of them effective, at least not on a sustained basis.
In a testament to the ephemeral nature of the fillip from government incentive programs, spending on household items and cars fell sharply in April. Also down dramatically: Purchases of jewelry (animal spirits stirred by the gold frenzy are waning), fuel (demand destruction) and on and on.
Needless to say, no economist expected a retail sales print as bad as the one the NBS delivered on Monday, nor did any professional forecaster suspect that industrial production would manage only a 4.1% gain. That was the weakest since July of 2023.
Not only is the two-speed characterization of the Chinese economy still apt (i.e., industrial output’s outstripping retail sales growth by a huge margin), “speed” is now a misnomer.
Even more concerning: The cumulative FAI tally turned negative in April. Recall that 2025 was the first year on record during which investment declined. Now, China’s tracking for a second consecutive annual drop, although there’s still time to course correct.
The investment rebound in Q1 was short-lived, “indicating the limits of fiscal support in the face of the war shock and structural excess capacity,” SocGen’s Wei Yao and Michelle Lam wrote Monday. “The deterioration was across the board,” they went on, flagging a “sharp slowdown in almost all sub-sectors” within manufacturing, where “cost pressure and supply chain stress stemming from the Strait of Hormuz blockade became more evident.”
The single-month YoY drop for April — i.e., comparing investment in April of 2026 to April of 2025 — was 8%.
That suggests the drag’s now roughly akin to the pressure felt during the back-half of last year. The sector breakdown for April showed investment declined 20% in property, 4.3% in manufacturing and 4% in infrastructure.
Monday’s disastrous figures come on the heels of an exceedingly rare contraction in new yuan loans. Although credit growth’s normally slow in April, it’s not common (at all) for the series to reflect a net repayment.
Household loans specifically fell nearly CNY800 billion which, as SocGen’s Lam emphasized, counted as “the largest repayment in over a decade.” “The decline was less dramatic in seasonally adjusted terms, but still showed no improvement from the multi-year deteriorating trend,” she added.
Note from the figure above that the growth rate for the overall outstanding loan stock slipped to yet another record low of just 5.6%.
I could go on, but I think you get the idea: April was a very rough month for the Chinese economy, and exports — which rose more than 14% last month — are the now the sole pillar of support.
Domestic demand isn’t just weak in China, it’s basically in reverse, credit demand is nonexistent among households and 2025’s unprecedented investment downturn is ongoing.
