China’s factory activities slowed in April, and Beijing condemned “sudden changes” in the global economy as it fought the growing trade war with the United States.
Penalising tariffs introduced by Donald Trump, which reached 145% on many Chinese products in April, Beijing responded with a 125% mandate on imports from the US. China’s exports skyrocketed more than 12% last month as businesses rushed ahead of tariffs punished.
According to the National Bureau of Statistics, the lowest read since December 2023, the purchase manager index (a key measure of industrial output) that will decrease to 49.0 in April in April, began to show the impact of the measure in Wednesday’s official data.
Reading in April represents a sharper decline than the 49.7 forecast in a Bloomberg survey. That has decreased from 50.5 in March. This was the best number in 12 months.
NBS statistician Zhao Qinghe said the decline has dipped to “a rapid change in the external environment (in China).
Economists warn that trade disruptions between the tightly integrated US and China’s economy could threaten businesses, raise consumer prices and cause a global recession.
“The weak manufacturing PMI in April is being driven by the trade war,” wrote Zhiwei Zhang, president and chief economist at PinPoint Asset Management, in a memo. “The macro data from China and the US will be even weaker as trade policy uncertainties slow business decisions.”
Goldman Sachs estimates that 16M employment in China could be at risk if high tariffs continue primarily in the export, wholesale and retail industries.
A new US measure to close loopholes that allowed low-value goods to be shipped to the US for free, came into effect Friday, which will primarily affect Chinese companies.
Over 90% of packages arriving in the US are based on a “minimum” scheme. This will allow items under $800 (£599) to avoid obligation. Starting Friday, these products that have driven the rise of e-commerce companies like Temu and Shein will be subject to a 120% tax or flat rate.
The world’s second largest economy has struggled to recover fully since the community pandemic, tackling a slump in domestic demand and a prolonged property sector crisis.
“China’s economy is under pressure as external demand cools,” said Zichun Huang, Chinese economist at Capital Economics. “The government is stepping up its financial support, but this will rarely offset the drag. We expect the economy to expand by just 3.5% this year.”
Last year, authorities announced a number of aggressive stimulus measures aimed at fostering growth, including cutting interest rates and easing several home buying restrictions.
In addition to this, leaders of major political conferences vowed in March to create jobs for the city in 2025.
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They also said they are aiming for 5% growth this year. He said this is the same as 2024, a goal that many economists consider to be ambitious.
Communist leaders have pledged to support businesses and workers most affected by the US-China trade war.
China is also ratcheting the propaganda war. On Tuesday, the Ministry of Foreign Affairs released a video entitled “Never Kneel Down!”
International Monetary Fund Goldman Sachs and UBS all recently revised their economic growth forecasts for over 2025 and 2026, citing the impact of US tariffs. None of them expect the economy to meet Beijing’s official growth targets.
Vice-chairman Zhao Chenxin, a Chinese state planner, said on Monday he was “fully confident” to reach its 5% growth target for 2025.
Chinese President Xi Jinping called for action on Wednesday to adapt to changes in the international environment and optimize its economic plans accordingly, state-run Xinhua reported.
Xi made his remarks while chairing a symposium in Shanghai on economic and social development.
Agence France-Presse and Reuters