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China's factory activity falls faster than expected in April
May 25, 2025 10:48 PM

*

Official manufacturing PMI at 49.0 in April from 50.5 in

March

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Non-manufacturing growth in April slows to 50.4

*

Trump's tariffs call time on producers front-loading

shipments

BEIJING, April 30 (Reuters) - China's manufacturing

activity contracted in April, an official factory survey showed

on Wednesday, keeping alive calls for further stimulus as Donald

Trump's "Liberation Day" package of tariffs snapped two months

of recovery.

The official purchasing managers' index (PMI) fell to 49.0

in April versus 50.5 in March, below the 50-mark separating

growth from contraction, and missing a median forecast of 49.8

in a Reuters poll.

U.S. President Trump's decision to single China out for

import duties of 145% comes at a particularly difficult time for

the world's No. 2 economy, which is struggling with deflation

due to sluggish income growth and a prolonged property crisis.

Producers had been front-loading outbound shipments in

anticipation of the duties, driving exports to a five-month high

in March, but the tariff's arrival has now called time on that

strategy.

Policymakers have largely relied on exports to shore up the

fragile economic recovery since the end of the pandemic and only

began to take steps to boost domestic demand more earnestly late

last year.

The non-manufacturing PMI, which includes services and

construction, fell to 50.4 from 50.8 in March.

Analysts expect Beijing to deliver more monetary and fiscal

stimulus over the coming months to underpin growth and insulate

the economy from the tariffs.

China has repeatedly denied it is seeking to negotiate with

the U.S. a way out of the tariffs, and appears to instead be

betting on Washington blinking first. As such, Beijing has

advanced this year's stimulus plans to mitigate the economic

pain of losing, at least temporarily, its biggest customer.

On Monday, the vice head of China's state planner said the

National Development and Reform Commission (NDRC) would roll out

new policies over the second quarter in line with the prevailing

economic conditions of the time.

That followed pledges by the Communist Party's elite

decision-making body, the Politburo, on Friday to support firms

and workers most affected by the duties.

The general consensus among China observers is a second

trade war with the U.S. will significantly weigh on growth, but

the NDRC's Zhao Chenxin said he was confident the country would

achieve its 2025 economic growth target of around 5%.

The International Monetary Fund, Goldman Sachs and UBS all

recently revised down their economic growth forecasts for China

over 2025 and into 2026, citing the impact of U.S. tariffs -

none of them expect the economy to hit Beijing's official growth

target.

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