San Francisco Frontiers - China's manufacturing shrinks in April as trade war bites

Punishing US tariffs that have reached 145 percent on many Chinese products came into force in April, while Beijing has responded with fresh 125 percent duties on imports from the United States.

The Purchasing Managers' Index -- a key measure of industrial output -- came in at 49 in April, according to the National Bureau of Statistics (NBS), below the 50-point mark that separates growth and contraction.

The reading for April was down from March's 50.5, the highest in 12 months.

The reading also represented a steeper decline than the 49.7 forecast by a Bloomberg survey.

"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 measures activity in the services sector, came in at 50.4, down from March's 50.8.

Economists have warned that the disruption in trade between the two tightly integrated US and Chinese economies could threaten businesses, increase prices for consumers and cause a global recession.

Chinese exports soared more than 12 percent last month as businesses rushed to get ahead of the swingeing tariffs.

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.

Authorities last year announced a slew of aggressive stimulus measures aimed at boosting growth including rate cuts and the easing of some home purchasing restrictions.

And in March, leaders at a key political meeting vowed to create 12 million new urban jobs in 2025.

They also said they would aim for growth this year of five percent -- the same as 2024 and a goal considered ambitious by many economists.

T.Rivera--SFF