However, economists argued that the data was just a short-term slowdown before more robust growth would be recorded later in the year.

Industrial output -- a main gauge of activity in plants across China -- rose 7.3 percent last month from a year earlier, the National Bureau of Statistics (NBS) said, down from 8.3 percent growth in March, and 11.0 percent in February.

"It was a small fluctuation in a generally upgoing trend," said Lian Ping, a Shanghai-based economist with the Bank of Communications.

"It's rather unlikely it will go back to a rate of around five percent," he said, referring to output figures of little more than five percent seen at the end of last year.

Since then Beijing has introduced a four-trillion-yuan (580 billion dollar) stimulus package aimed at boosting growth at home as the world's third biggest economy comes under strain from a slump in its key export sector.

Exports fell 22.6 percent in April to 91.9 billion yuan from a year earlier in the sixth straight monthly decline, according to figures from the customs bureau.

The package is heavily focused on infrastructure investment, and various economic indicators show it is starting to have an impact.

April's production of cement, for example, a key component in construction projects, increased 12.9 percent from a year earlier, the bureau said.

Investment in urban fixed assets, a key indicator of spending on infrastructure, was up 30.5 percent in the first four months of 2009 compared with the same period a year ago, the government said Tuesday.

"It's likely we will start to see industrial output growth picking up into the second half of the year," said Robert Subbaraman, a Hong Kong-based economist with Nomura International.

"While exports are going to weaken and remain weak, we think the fiscal stimulus is going to be very strong," he said.

However, retail sales, the main measure of consumer spending, grew by 14.8 percent year on year in April. The figure, revealed by the NBS, compared with 22 percent growth in April 2008.

In the first four months of 2009, retail sales expanded by 15 percent compared with the same period in 2008, the bureau said.

For all of last year, retail sales were up 21.6 percent, previously released government data showed.

Xing Ziqiang, economist at the China International Capital Corporation, said pointers were good for future consumption as the past months have seen a steady rise in the purchasing managers' index, a general measure of the mood in the manufacturing sector.

"This shows that the pressure from unemployment and deflation may be lessening, and this in turn could bolster consumer spending in future," he said in a research note.

The World Bank has forecast that China's economy will grow by just 6.5 percent in 2009, the lowest level since 1990. It expanded by 6.1 percent in the first quarter of the year.

earlier related report
China focus on boosting domestic demand sees success
China's efforts to boost domestic demand to fight the global financial crisis showed strong signs of success Tuesday, with investment in infrastructure rising as exports fell.

Analysts said the impact of a four-trillion-yuan (580-billion-dollar) package unveiled in November to stimulate demand at home had started to be felt as China moves towards an investment-heavy growth model.

Exports fell 22.6 percent in April to 91.9 billion yuan from a year earlier in the sixth straight monthly decline, according to figures from the customs bureau.

But urban fixed asset investment, an indicator of the government's progress in lifting growth by funding infrastructure projects, was up 30.5 percent in the first four months of 2009, the National Bureau of Statistics said.

According to research firm Moody's Economy.com, this represented the highest rate of growth since July 2006.

"This very obviously shows that domestic demand is quite good because of the fiscal stimulus package, and external demand is still too weak," said Xu Jian, a Beijing-based economist at China International Capital Cooperation.

China's massive export machine -- a main driver of growth over the past three decades -- was battered late last year as the global financial crisis hurt overseas demand.

The slowdown has led to the closure of thousands of exporting factories in the country's manufacturing heartlands, and, according to government data, at least 25 million migrant workers from poor rural areas are now unemployed.

Figures released by the statistics bureau showed that funds for fixed asset spending in China have come overwhelmingly from domestic sources so far in 2009.

Investments by domestic enterprises in the first four months of the year were up 34.6 percent, while investment by foreign businesses in the same period was down 1.2 percent, it said.

According to the customs data, China's exports in April rose 6.9 percent compared to March, and imports increased 15.1 percent.

Glenn Maguire, chief economist for the Asia Pacific region at Societe Generale, said this was consistent with an economy that was being driven by very strong fixed-asset investment growth.

"As China moves to an investment- and infrastructure-heavy growth model, what we are seeing is the economy is sucking in imports to meet that," he said.

The statistics bureau also said that spending on new projects increased by 90.7 percent in the first four months of the year.

This suggested "that aided by the fiscal stimulus, total fixed investment is still likely to rise solidly in coming months," said Qian Wang of JP Morgan.

But Matt Robinson, an economist at Moody's Economy.com, cautioned that the strong growth in investment was not necessarily the sign of a good economic outlook.

"Strong stimulus spending and a surge in new loan approvals appear to be driving the strong growth in investment, rather than a healthy economic outlook," he said in a research note.

The customs bureau highlighted Tuesday a slight improvement in the situation, saying the drop in trade in April had slowed by 1.9 percentage points compared to that of the first three months of the year.

Xu said that he expected exports to gradually improve towards the end of the year.

"But in the future, the government will definitely focus their policy more on consumption, as it knows its economy is imbalanced," Xu said, adding that this would take time.

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