President Trump’s tariffs have already caused losses to Chinese factories.
The three weeks of a trade war raised import tariffs on imported goods to 145%, and a formal report on manufacturing activity showed that in April, Chinese factories experienced more than a year of monthly slowdowns.
The report, a survey of industrial companies published by the National Bureau of Statistics on Wednesday, provides the first formal sign of how U.S. tariffs affect China’s economy. China has responded to tariffs on U.S. goods of 125%.
Trade marginality threatens our and China’s growth – possibly the global economy. Emerging signs in both countries have increased pressure from President Trump and Chinese top leader Xi Jinping to reach a deal that undermines the deadlock.
Both Beijing and Washington seem ready to wink. The Chinese Foreign Ministry released a videotape on Tuesday saying the country refused to fall into a “bully.” President Trump continued to step back in an interview with ABC News on Tuesday, saying China “tears us like no one has taken us away.” He said he believes China “may eat these tariffs” against anxiety about the impact of consumers and businesses imposed on him.
On Tuesday, transport giant United Parcel Service announced that it would lay off 20,000 jobs this year and close 73 buildings. GM said it no longer needed its previous forecast for steady profit growth this year, citing Mr. Trump’s tariffs on imported cars and imported parts. U.S. consumer confidence has dropped to its lowest level in five years.
The China Manufacturing Purchasing Managers Index fell to 49.0 in April, down from 50.5 in March. Readings below 50 indicate deterioration in the sector’s activities. The index has exceeded 50 in the past two months, which is encountered on orders before the tariffs. April’s figures were lower than economists’ expectations.
The survey has read the lowest readings of new orders for exports since the Covid-19 pandemic, delaying the entire index. In addition, since February 2024, a range of manufacturing industries have reached their lowest employment levels.
Capital Economics Chinese economist Zichun Huang said in a report to clients that the data “shows that China’s economy is under pressure as external demand cools.” She said the steps the government is taking to put money into the economy “is unlikely to completely offset the resistance”. Capital economics predicts that China’s economy will grow by 3.5% this year, which is far below the government’s 5% growth target.
Nomura Securities said in a research note on Tuesday that if China’s exports to the United States would fall by 50%, 5.7 million people in China could lose their jobs immediately. Once the long-term impact breaks out in the economy, that number could grow to 15.8 million workers.
Beijing has pledged to support its economy during the trade war with the United States, aiming to encourage its people to spend more plans. The ideas proposed include prompting local governments to increase subsidies for those in need and increasing pension benefits for retirees.
Chinese officials hope to stimulate domestic spending, and the impact on the country’s economy remains weak in the face of the property crisis. In order to offset the stagnation in consumption, China’s economy is more dependent on exports.
On Wednesday, China passed a law aimed at safeguarding the rights of private companies. In recent years, China’s focus on security and state control has been at the expense of the vitality that will help China become the world’s second largest economy.
Private business owners complain that their economic interests and rights are often overlooked rather than government priorities and policies. On the surface, the law aims to alleviate some of these problems.
