China’s Economy Shows Improvement in May as Industrial Production Comes in Better than Expected

China’s economy showed improvement in May from a decline the previous month as industrial production came in better than expected, but consumption remained sluggish, highlighting the difficulties for policymakers under COVID curbs.

In May, industrial production rose by 0.7% year-on-year, which was somewhat better than an expected 0.7% decline predicted by analysts polled by Reuters. In April, industrial production unexpectedly decreased by 2.9% on an annual basis.

Retail sales, on the other hand, fell less than projected in May, falling 6.7% year on year. According to a Reuters poll, retail sales in May were predicted to have fallen by 7.1% compared with the same period last year.

China’s National Bureau of Statistics said in a statement that the economy “showed a good momentum of recovery” in May, “with negative effects from Covid-19 pandemic gradually overcome and major indicators improving marginally.”

“However, we must be aware that the international environment is to be even more complicated and grim, and the domestic economy is still facing difficulties and challenges for recovery,” the bureau said.