SHIYAN, China —Sales of Yizhuan Automobile Co.'s trash trucks have seen modest growth after China lifted anti-virus controls, but the company is facing challenges in rebuilding its business post-pandemic. China's economy initially rebounded, but factory output and consumer spending have started to weaken. Yizhuan's sales have only increased by single-digit percentages from last year's depressed level. The company, based in Hubei province, is slowly recovering, reflecting the overall slow growth in China's economy.

Achieving the ruling Communist Party's target of around 5% growth for the year will require a further pickup in economic momentum, according to UBS economist Zhang Ning. To boost confidence among businesses and consumers, the Chinese economy needs a rebound in domestic demand with government support.

Despite the lifting of restrictions and hopes for a consumer boom, retail sales remain weak, as people are uncertain about the economic outlook and potential job losses, leading to hesitancy in making significant purchases. In April, retail sales saw a modest increase of 18.4% compared to last year, falling short of private sector forecasts calling for up to 35% growth.

Factory output declined by 0.5% and investment growth slowed. The cautious sentiment among consumers, influenced by concerns about COVID-19 and international developments, has led to reservations about spending money.

In May, manufacturing in China experienced a faster contraction, as indicated by a survey conducted by the national statistics agency and an industry group. The decline was attributed to a decrease in new orders and export orders. The global consumer demand was affected by interest rate hikes implemented by the Federal Reserve and central banks in Europe and Asia to curb inflation, resulting in a significant drop in exports.

Specifically, exports to the United States saw a substantial decline of 18.2%. This poses a challenge for automakers and other manufacturers who are relying on increased international sales to compensate for weak domestic demand.

Tenglong Automobile Co., a manufacturer of electric buses in Xiangyang, seized the opportunity to revive orders from foreign customers by sending salespeople to Russia, South Korea, and Southeast Asia as soon as travel restrictions were lifted. After a three-year gap in orders, the company has already received several batches of orders this year, including three in May. Similarly, Yizhuan, based in Shiyan, exports vehicles worth around $20 million annually to Russia and Southeast Asia, in addition to selling sanitation, cargo, and dump trucks domestically.

However, businesses in other sectors are facing challenges as customers exhibit reduced willingness to spend. Li Yichun, who operates a bodyguard business in Beijing, has noticed a decline in his clients' spending habits, indicating a slow economic recovery. Many bosses are refraining from hiring and cutting back on expenditures compared to previous years.