China Factory Growth Slows Six Months, Retail Sales Surge May

China's factory output growth slowed to a six-month low of 5.8% in May, missing expectations and reflecting the ongoing pressures from the trade war with the United States and weak external demand. Despite this, retail sales surged 6.4%, the fastest growth since late 2023, bolstered by government-subsidized consumer goods trade-in programs and extended holiday shopping festivals. However, the economic relief from retail gains appears temporary as the property sector continues to struggle, with new home prices falling further and property investment contracting sharply. Analysts note that the US-China trade truce has not been sufficient to reverse the broader loss of economic momentum, and high tariffs, waning fiscal support, and structural headwinds suggest growth is likely to slow further. Fixed-asset investment growth also slowed, with urban unemployment easing slightly to 5.0%. Overall, despite some positive consumer spending data, investors remain unconvinced about a near-term pickup in China's growth trajectory.