May 20 (Bloomberg) -- China’s economic recovery began to stall in the second half of April and is slowing further this month, raising concern that the rebound won’t be as “strong as many recently have hoped,” Credit Suisse Group AG said.

Retail industries including electronics and department stores have weakened, adding to a slump in power consumption, Dong Tao, a Hong Kong-based economist said in a report.

“The pace has slowed, even reversed in some sectors,” Tao said. “The trend has become more visible in May.”

Credit Suisse, Switzerland’s biggest bank by market value, joins the World Bank and Oppenheimer & Co. this week in raising concern about the strength of the world’s third-biggest economy. The World Bank said today enthusiasm about a recovery may be “premature.” Katherine Lu, Oppenheimer’s China equities director, said the economy is “struggling” and may fall short of the government’s 8 percent growth forecast.

The slowdown may spur declines in the country’s stocks, Credit Suisse said. The Shanghai Composite Index has climbed 46 percent this year on speculation a 4 trillion yuan ($586 billion) stimulus package will revive growth as exports fell after recessions in the U.S., Japan and Europe.

“Renewed concern about China’s growth momentum could trigger a market correction,” Credit Suisse said.

China’s economy expanded 6.1 percent in the first quarter, the slowest pace in almost a decade. Overseas shipments declined 22.6 percent in April from a year earlier, the customs bureau said last week.

Investment ‘Way Down’

Manufacturing may falter in coming months after expanding in March and April, Tao said. The Purchasing Manager’s Index, or PMI, rose to 53.5 in April from 52.4 in March. A reading above 50 indicates an expansion.

“The PMI runs a risk of slipping below 50 over the next few months,” Tao wrote.

David Dollar, the World Bank’s country director for China, said today it was “hard to get too excited about the future” for the economy because private investment is lagging government spending.

Private investment, the main driver of growth, was “way down” in the first quarter, Dollar said at a forum in Beijing, without citing a figure.

Xu Lin, director general of China’s department of fiscal and financial affairs at the National Development and Reform Commission, said the economy can “definitely” reach its 8 percent growth forecast this year. Gross domestic product will expand 7.8 percent in 2009, according to the median forecast of 10 economists surveyed by Bloomberg.

Nobel Prize-winning economist Joseph Stiglitz said this month that China may emerge “a winner” from the global crisis because the nation is buffered by a high savings rate and the government “has taken very rapid action.”

To contact the reporter on this story: Allen Wan in New York at awan3@bloomberg.net

Last Updated: May 20, 2009 14:40 EDT