FACTORIES in China slowed their output growth in April and retail sales missed expectations as officials warned of new problems affecting the recovery in the world’s second-largest economy.

While China’s exporters are enjoying strong demand, global supply chain bottlenecks and rising raw materials costs have weighed on production, cooling the blistering economic recovery from last year’s COVID-19 slump.

Factory output grew 9.8 percent in April from a year ago, in line with forecasts but slower than the 14.1 percent surge in March, National Bureau of Statistics (NBS) data showed yesterday. Retail sales, meanwhile, rose 17.7 percent, much weaker than a forecast 24.9 percent uptick and the 34.2 percent surge in March.

NBS spokesman Fu Linghui said while China’s economy showed a steady improvement in April, new problems are also emerging, notably the rise in international commodity prices.

“The foundations for the domestic economic recovery are not yet secure,” Fu told a news briefing in Beijing yesterday.

“For companies as a whole, price increases are conducive to the improvement of corporate efficiency, but the pressure on downstream industries needs to be paid attention to,” he added.

Rising raw materials prices could put pressure on downstream firms, said Fu.

However China is able to keep consumer price inflation steady this year, he said.

China’s factory price inflation hit its highest pace since October 2017 in April. That could rise further in the second and third quarters, according to a report from the central bank last week.

The slower growth rates in the April activity indicators were also due in part to the fading base effects as year-on-year comparisons rolled away from very sharp declines seen when the coronavirus shut down much of the country in early 2020.

In the factory sector, motor vehicle production growth fell sharply to 6.8 percent from 69.8 percent, due in part to the base effect as well as critical shortages of semiconductors used in car systems.

Growth in the production of cement slowed in April, and coal production fell on year, although aluminum and crude steel output hit record highs, helped by firm demand.

“China’s economy shows signs of unbalanced recovery: strong exports and domestic investment on one hand, but weak consumption on the other,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.

Sectors related to travel, leisure and entertainment are large employers and still held back by COVID-19 uncertainty, he said.

Home appliances sales growth dropped particularly sharply in April from the month before, falling from 38.9 percent growth year on year in March to 6.1 percent, NBS data showed.

The activity indicators yesterday also showed fixed-asset investment increased 19.9 percent in the first four months from the same period a year earlier, slowing from January-March’s 25.6 percent increase.

Private-sector fixed-asset investment, which makes up around 60 percent of total investment, rose 21 percent in the January-April period, compared with a 26 percent jump for the first three months. (SD-Agencies)