China’s factory activity slowed in April, with Beijing blaming “sharp changes” in the global economy as it fights a mounting trade war with the United States.
Punishing US tariffs that reached 145% on many Chinese products came into force in April, and Beijing responded with 125% duties on imports from the US. Chinese exports soared more than 12% last month as businesses rushed to get ahead of the punishing tariffs.
The impact of the measures began to show in official data on Wednesday, with the Purchasing Managers’ Index (PMI) – a key measure of industrial output – falling to 49.0 in April, according to the National Bureau of Statistics (NBS), the lowest reading since December 2023.
Anything below the 50-point mark signifies a contraction.
The reading for April represented a steeper decline than the 49.7 forecast in a Bloomberg survey. It was down from March’s 50.5, which was the highest figure in 12 months.
Zhao Qinghe, an NBS statistician, said the drop was largely down to “sharp changes in [China’s] external environment”, in a note accompanying the release.
Economists have warned that the disruption in trade between the tightly integrated US and Chinese economies could threaten businesses, increase prices for consumers and cause a global recession.
“The weak manufacturing PMI in April is driven by the trade war,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note. “The macro data in China and the US will weaken further … as the trade policy uncertainty delays business decisions,” he added.
China’s economy, the world’s second-largest, has struggled to fully recover since the Covid-19 pandemic and is also grappling with sluggish domestic demand and a protracted property sector crisis.
“China’s economy is coming under pressure as external demand cools,” said Zichun Huang, China Economist at Capital Economics, in a note. “Although the government is stepping up fiscal support, this is unlikely to fully offset the drag, and we expect the economy to expand just 3.5% this year,” Huang added.
Authorities last year announced a slew of aggressive stimulus measures aimed at boosting growth including rate cuts and the easing of some home purchasing restrictions.
And in March, leaders at a key political meeting vowed to create 12 million new urban jobs in 2025.
They also said they would aim for growth this year of 5% – the same as 2024 and a goal considered ambitious by many economists.
The International Monetary Fund, Goldman Sachs and UBS all recently revised down their economic growth forecasts for China over 2025 and into 2026, citing the impact of US tariffs. None of them expect the economy to hit Beijing’s official growth target.
With Agence France-Presse and Reuters
www.theguardian.com
#China #manufacturing #activity #plummets #Trump #tariff #war #Trump #tariffs
