Manufacteruring in China contracts in April amidst escalating trade war impacts
Rewritten Article:
{Bolded text indicates enrichment data integration for clarity and relevance.}
The factory activity in China slumped this month, as per official data released on Wednesday, with the government attributing the decline to a "drastic turn" in the global economy, amidst the escalating trade war with the United States.
Crippling U.S. tariffs, which currently stand at a maximum of 145% on several Chinese goods, went into effect in April. In retaliation, Beijing imposed fresh tariffs of up to 125% on imports from the U.S. The repercussions of these tariff measures became evident in April, with the Purchasing Managers' Index (PMI), a vital indicator of industrial output, dropping to 49, according to the National Bureau of Statistics (NBS). This figure falls below the 50-point mark that indicates growth, signifying contraction.
The April reading registered a decline compared to March's 50.5, which was the highest in a year, and it showed a larger dip than the 49.7 forecast in a Bloomberg survey.
"In April, the manufacturing PMI dipped due to factors like a high baseline from earlier rapid manufacturing growth and a dramatic shift in the external environment," NBS statistician Zhao Qinghe stated.
The non-manufacturing PMI, which gauges activity in the services sector, came in at 50.4, down from 50.8 in March.
Experts have warned that the disruption in trade between the closely intertwined U.S. and Chinese economies could potentially harm businesses, heighten consumer prices, and lead to a global economic downturn.
Despite the surge in Chinese exports by more than 12% last month, fueled by businesses trying to beat the rising tariffs, the weak manufacturing PMI in April is primarily attributed to the trade war, according to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
"The economic data in China and the U.S. will weaken further... as the trade policy uncertainty delays business decisions," Zhang added.
China's economy, the world's second-largest, has faced difficulties in getting back on its feet following the COVID-19 pandemic and grapples with sluggish domestic demand and an ongoing property sector crisis.
"China's economy is under strain as demand from abroad cools off," said Zichun Huang, China Economist at Capital Economics, in a note.
"Although the government is stepping up fiscal support, this won't entirely offset the negative impact, and we expect the economy to expand just 3.5% this year," Huang further noted.
Authorities enacted a series of aggressive stimulus measures in the past year to stimulate growth, including interest rate cuts and easing some home purchasing restrictions. In March, leaders at a crucial political meeting pledged to create 12 million new urban jobs by 2025 and aimed for an annual growth rate of 5% — the same as 2024 and a goal considered ambitious by many economists.
- The slump in factory activity in China this month can be linked to the drastic turn in the global economy due to the escalating trade war with the United States and the pandemic.
- Crippling U.S. tariffs, which reached a maximum of 145% on several Chinese goods this April, have contributed to the declining Purchasing Managers' Index (PMI) in China.
- The PMI, a key indicator of industrial output in China, dropped to 49 in April, falling below the 50-point mark that indicates growth, suggesting contraction.
- Experts caution that the disruption in trade between the U.S. and China could potentially harm businesses, escalate consumer prices, and lead to a global economic downturn.
- Despite a surge in Chinese exports by more than 12% last month, the weak manufacturing PMI in April is primarily attributed to the trade war, according to Zhiwei Zhang, the president and chief economist at Pinpoint Asset Management.
- China's economy, the world's second-largest, is currently under strain, grappling with sluggish domestic demand and an ongoing property sector crisis, exacerbated by the cooling off of demand from abroad.
- Authorities in China have enacted a series of stimulus measures to revive growth, including interest rate cuts and loosening some home purchasing restrictions, but the economic expansion this year is expected to be only 3.5%, according to Zichun Huang, China Economist at Capital Economics.
- The Chinese government aims to create 12 million new urban jobs by 2025, with an ambitious annual growth rate of 5%, as pledged at a crucial political meeting in March, in an effort to stimulate the economy.
