BEIJING (Reuters) – China’s manufacturing activity contracted in April, an official factory survey showed on Wednesday, keeping alive calls for further stimulus as Donald Trump’s “Liberation Day” package of tariffs snapped two months of recovery.
The official purchasing managers’ index (PMI) fell to 49.0 in April versus 50.5 in March, below the 50-mark separating growth from contraction, and missing a median forecast of 49.8 in a Reuters poll.
U.S. President Trump’s decision to single China out for import duties of 145% comes at a particularly difficult time for the world’s No. 2 economy, which is struggling with deflation due to sluggish income growth and a prolonged property crisis.
Producers had been front-loading outbound shipments in anticipation of the duties, driving exports to a five-month high in March, but the tariff’s arrival has now called time on that strategy.
Policymakers have largely relied on exports to shore up the fragile economic recovery since the end of the pandemic and only began to take steps to boost domestic demand more earnestly late last year.
The non-manufacturing PMI, which includes services and construction, fell to 50.4 from 50.8 in March.
Analysts expect Beijing to deliver more monetary and fiscal stimulus over the coming months to underpin growth and insulate the economy from the tariffs.
China has repeatedly denied it is seeking to negotiate with the U.S. a way out of the tariffs, and appears to instead be betting on Washington blinking first. As such, Beijing has advanced this year’s stimulus plans to mitigate the economic pain of losing, at least temporarily, its biggest customer.
On Monday, the vice head of China’s state planner said the National Development and Reform Commission (NDRC) would roll out new policies over the second quarter in line with the prevailing economic conditions of the time.
That followed pledges by the Communist Party’s elite decision-making body, the Politburo, on Friday to support firms and workers most affected by the duties.
The general consensus among China observers is a second trade war with the U.S. will significantly weigh on growth, but the NDRC’s Zhao Chenxin said he was confident the country would achieve its 2025 economic growth target of around 5%.
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 U.S. tariffs – none of them expect the economy to hit Beijing’s official growth target.
(Reporting by Joe Cash; Editing by Sam Holmes)
Brought to you by www.srnnews.com
