Photo: CNN Business

China’s industrial output grew 5.6% in April from a year earlier, falling short of expectations.

The data, released by the National Bureau of Statistics, fell short of the 10.9% estimated by analysts. However, it was the fastest growth since September 2022, largely due to the recoil effect from the contraction was under stringent COVID lockdown, affecting many of China’s major cities.

The data has fuelled doubts over the strength of China’s rebound after abandonment of the zero COVID policy led expectations of growth. China’s policy makers have set the lowest growth target in decades, at just 5%.

It is likely that these disappointing statistics will raise concern among investors, and perhaps accelerate many international businesses to turn their attention to other developing countries, especially ones with lower labor costs. With the recent crackdown on foreign companies and consultants conducting due diligence, this may only further drive foreign companies away.

In the political sphere, many leaders are talking about “de-risking” from China, an ambiguous term coined at the recent G7 meeting aimed at managing economic ties with as little fallout as possible. If countries do move away from engagement with China, it will only exacerbate the slowing down of China’s economy.