As Beijing battles an escalating trade war with the United States, official statistics released Wednesday indicated that China’s industrial activity decreased in April after expanding at its fastest rate in a year the month before.
Beijing has retaliated with new 125 percent levies on U.S. imports, while the United States imposed punishing tariffs in April that have reached 145 percent on some Chinese goods.
According to the National Bureau of Statistics (NBS), the Purchasing Managers’ Index, a crucial indicator of industrial activity, fell to 49 in April, falling short of the 50-point threshold that distinguishes growth from contraction.
April’s rating was lower than March’s 50.5, which was the highest in a year. It was also a sharper drop than the Bloomberg survey’s prediction of 49.7.
“In April, affected by factors such as a high base from earlier rapid manufacturing growth and a sharp shift in the external environment, the manufacturing PMI fell,” NBS statistician Zhao Qinghe said in a statement.
The non-manufacturing PMI, which gauges service sector activity, dropped from 50.8 in March to 50.4.
Economists have cautioned that a worldwide recession, higher consumer prices, and corporate threats could result from the disruption of trade between the closely intertwined US and Chinese economies.
As companies scrambled to beat the fluctuating taxes, Chinese exports surged more than 12 percent last month.
“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.
The world’s second-largest economy, which has struggled to fully recover since the Covid-19 pandemic, is also facing sluggish domestic demand and a protracted property sector crisis.
In order to spur growth, authorities last year announced a number of dramatic stimulus measures, such as rate cuts and the relaxation of certain limitations on property purchases.
At a significant political gathering in March, leaders also pledged to add 12 million new urban employment by 2025.
Additionally, they stated that they will aim for a five percent growth rate this year, which is the same as 2024 and is seen by many economists as an ambitious ambition.
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