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China's Export Orders Dip in April 04/30 06:07
Higher tariffs on U.S. imports of products from China are taking a toll on
the world's second-largest economy as export orders sink, according to monthly
surveys of Chinese factory managers released Wednesday.
(AP) -- Higher tariffs on U.S. imports of products from China are taking a
toll on the world's second-largest economy as export orders sink, according to
monthly surveys of Chinese factory managers released Wednesday.
The official survey by the China Federation of Logistics and Purchasing
shows export orders slowed sharply in April, with Beijing and Washington in a
standoff after U.S. President Donald Trump ordered combined tariffs of up to
145% on Chinese goods.
China has imposed duties of up to 125% on U.S. products, with some
exemptions. It has also ordered other retaliation, such as tighter restrictions
on exports of some strategically important minerals used for high-tech products
such as electric vehicles.
American businesses are cancelling orders from China and postponing
expansion plans as they watch to see what comes.
The official manufacturing purchasing managers index fell to a 16-month low
of 49.0 from 50.5 in March. That's on a scale where 50 marks the break between
expansion and contraction. A private survey by the financial information group
Caixin fell to 50.4 from 51.2.
"The sharp drop in the PMIs likely overstates the impact of tariffs due to
negative sentiment effects, but it still suggests that China's economy is
coming under pressure as external demand cools," Zichun Huang of Capital
Economics said in a report.
Large manufacturers are likely to be hit harder than smaller ones that are
more labor intensive, since China still enjoys a cost advantage for such
products, economists at ANZ Research said.
"China's manufacturing cost for light industries may be one-fifth that of
the U.S., which is unlikely to change," they said in a report.
Earlier this week, senior Chinese economic officials convened a news
conference where they showcased Beijing's support for the economy and its
capacity to do more to counter the impact of the tariffs.
The economy expanded at a solid 5% annual pace in 2024 and the ruling
Communist Party has set a target for growth at about that level this year.
But that was before Trump escalated his trade war, piling on still higher
tariffs with an aim of compelling manufacturers to rebase production to the
United States.
"Overall, in April, the expansion in supply and demand slowed, with exports
stunted and employment shrinking slightly. Manufacturers sought to reduce
stocks, logistics were delayed, and prices remained under pressure. Market
optimism weakened significantly," Wang Zhe, wrote senior economist at Caixin
Insight Group.
Business sentiment was at one of the lowest levels on record, Wang said.
Private economists have downgraded their forecasts for the economy this year
and next. Capital Economics estimates the economy will expand only 3.5% in 2025.
The economy grew 5.4% from a year earlier in the first quarter of the year,
as companies rushed to beat the higher tariffs. Chinese exports surged more
than 12% year-on-year in March.
Although some Chinese exports will likely be diverted to other countries,
Trump's trade war has raised the risk of recession in the U.S. and its impact
is expected to ripple across the global economy.
The International Monetary Fund said in a recent update that the outlook for
the U.S. and global economies this year and next has significantly worsened.
It forecast the global economy will grow just 2.8% this year, down from its
estimate in January of 3.3%.
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