China's economic activity weakens amid tariff war
Tariff war impact
Wednesday's unexpectedly weak data prompted suggestions Beijing will needs to boost stimulus spending and bank lending to hit this year's official economic growth target of 6 to 6.5 percent.
Damage might spread
Softening consumer demand
"Chinese policymakers will therefore need to roll out further fiscal and monetary policy stimulus," said Biswas.
April's growth in factory output decelerated to 5.4 percent over a year earlier from March's 8.5 percent growth, according to the National Bureau of Statistics.
Retail sales growth fell to 7.2 percent over a year ago from the previous month's 8.7 percent. That's a setback for Chinese leaders who want to promote self-sustaining economic growth based on domestic consumption instead of trade and investment.
An escalating dispute
President Donald Trump's tariff hikes on Chinese imports have been hard on manufacturers.
The escalating dispute also is unnerving Chinese consumers, depressing domestic demand.
Loss could increase
They say the loss could widen to 1 percentage point if both sides extend penalties to all of each other's goods. That would push annual growth below 6 percent, raising the risk of politically dangerous job losses.
"Policymakers are likely to step up stimulus again, mainly through pushing banks to make more loans and ramping up fiscal spending," Macquarie Bank said in a report.
It warned of 'rising volatility' in financial markets due to uncertainty about trade and economic growth.
"Things might have to get worse first to convince politicians to be realistic and get things done," said the report.