Official data show that new export orders have fallen to the lowest level in 13 years, excluding Covid-19 disruption.
China’s factory activity has shrunk more than expected in April after a two-month recovery, a survey on Wednesday suggests that the country’s vast manufacturing industry is beginning to feel the effects of the ongoing trade war with the US.
Official NBS data showed new export orders fell to 44.7 from 49 in March. It’s the lowest level since April 2012 (except for Covid-19 confusion).
Non-manufacturing PMI, which includes services and construction, also fell from 50.8 to 50.4 in April, but still floats above the 50 mark separating economic growth from contraction.
The ruling China Communist Party (CCP) has also pledged more fiscal stimulus, pledged to increase debt issuance, and further monetary easing to give some reprieve to the world’s second largest economy.
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Still, the latest data appears to show 145% of Trump’s tariffs on most Chinese-grown goods. This shows continued efforts to balance the US administration’s trade deficit and pressure the Chinese administration to curb fentanyl exports to the US.
Trump’s tariffs come as China continues to fight deflation due to revenue growth and the long-term property crisis following the collapse of Evergrande.
Beijing retaliates with a 125% collection on US imports, effectively imposing a trade embargo on each other’s goods. It also places export restrictions on rare earth minerals, which are important for the production of high-tech items such as weapons, semiconductors, and batteries.
The PMI in China’s manufacturing industry fell from 51.2 in March to 50.4 in April, according to that survey, which beat analysts’ expectations in the Reuters poll. It still outperformed the 50 mark growth separate from contraction, but marked the lowest reading since January.
“The trade disruption caused by higher US tariffs has reportedly contributed to the initial decline in the new export order for three months,” Caixin/S&P Global said in a statement. “Outside demand has weakened, and overall new order growth has decreased, increasing at its softest pace in seven months.”
Dr. Wang Zhe, senior economist at Caixin Insight Group, added that the ripple effects of the ongoing Chinese and US tariff standoffs will be felt gradually in the second and third quarters.
After data was released on Wednesday, the Chinese yuan fell low against the dollar.
The International Monetary Fund, Goldman Sachs and UBS have recently revised China’s economic growth forecasts for over 2025 and 2026, pointing to the impact of US tariffs and do not expect to meet its 5% growth target.
“You’re not growing at 5.4% and the bond market will collapse in the economic nuclear winter,” he said in a post on social media platform X.
Reuters contributed to this report.
