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Exports of products made in inland China, a long-term pillar of its post-pandemic recovery, appear to be sputtering under the weight of renewed US tariffs by the Trump administration. China is one of the countries hardest hit by the US-imposed tariffs, which have escalated the geopolitical tensions between the two economic superpowers, with effects spilling across the globe. Cracks start showing in China’s factory sector A Reuters poll of 32 economists found that outbound shipments climbed just 1.9% year on year in April, a sharp deceleration from March’s 12.4% surge, which had been driven by firms racing to beat incoming duties. At the same time, imports are projected to have fallen 5.9%, deepening March’s 4.3% decline and underscoring the drag on China’s $18.7 trillion economy. Beijing, which only late last year began shifting policy toward boosting domestic demand, has relied heavily on exports to prop up growth since the pandemic’s end. But with US President Donald Trump raising levies on Chinese goods to an effective 145% and China retaliating with duties of up to 125% on American imports, that strategy is under threat. As officials from both capitals prepare to meet in Switzerland this weekend, markets hope for a de-escalation, but the immediate picture remains grim. Meanwhile, China’s factory sector is already showing cracks. Official data released at the end of April revealed the manufacturing Purchasing Managers’ Index (PMI) plunged to 49.0, its lowest reading in 16 months and firmly in contraction territory. The non-manufacturing PMI, covering services and construction, also eased, though it stayed marginally above the 50 threshold separating growth from decline. Trade wars weaken China Zhao Qinghe, a statistician at the National Bureau of Statistics, attributed the downturn to “sharp changes in China’s external environment”. His comments echo a growing consensus that the sudden reversal from front-loaded…

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Filed under: News - @ May 8, 2025 12:23 pm