Strong growth in Chinese retail despite US trade dispute

Chinese retail sales increased by 6.4 percent year-on-year in May, despite the ongoing trade dispute with the US. This marked the strongest growth since late 2023, following a 5.1 percent rise in April.

Analysts were surprised by this positive development, having forecasted a decline in growth to 4.9 percent. French bank Société Générale analyst, Michelle Lam, suggested that favourably timed public holidays contributed to the sales increase. However, she also highlighted the continuing property crisis in China, which typically negatively impacts consumer spending.

Industrial production was slightly weaker than anticipated. The Chinese government reported a 5.8 percent year-on-year increase in May, following 6.1 percent growth the previous month. Analysts had, on average, expected growth of 6.0 percent.

The Chinese economy experienced a solid start to the year with 5.4 percent growth in the first quarter. The Chinese government has set an ambitious growth target of approximately 5 percent for 2025. However, the trade dispute with the US is likely to affect the world's second-largest economy as the year progresses. Although both countries recently made progress in trade talks in London, observers expect that the trade dispute will dampen Chinese economic growth from the second quarter onwards.(DPA)