Investing.com -- The trade war with the U.S. has begun to show significant impact on China’s economy, with steep American tariffs affecting export orders and factory production in the country.
China’s manufacturing activity has weakened due to the rising tariffs, particularly impacting export orders in April. Surveys published on Wednesday by China’s National Bureau of Statistics showed that a measure of new export orders fell to its lowest since the Covid-19 pandemic in 2022.
Additionally, overall manufacturing activity in China was the weakest it has been in more than a year. The country’s Purchasing Managers’ Index (PMI) dropped to 49, indicating a contraction in the sector.
This is the lowest it has been since December 2022. New export orders have also been hit, reaching their lowest point since the same month.
Analysts from Capital Economics suggested that the significant drop in the PMI might overstate the impact of tariffs due to negative sentiment effects. However, they also noted that it indicates that China’s economy is under pressure as external demand decreases.
"Although the government is stepping up fiscal support, this is unlikely to fully offset the drag, and we expect the economy to expand just 3.5% this year," economist Zichun Huang wrote in a note.
This economic strain is adding pressure on Beijing to increase stimulus measures and negotiate with the U.S. Despite this, the Chinese government maintains a defiant stance.
These developments highlight the impact of President Trump’s severe tariffs on Chinese imports. They are beginning to affect China’s economic core, increasing the pressure on Beijing to enhance its stimulus efforts to maintain growth.
Evolving situation also adds pressure on China’s leader, Xi Jinping, to reach a trade agreement with President Trump. However, the current message from Beijing is one of strong defiance against what it sees as U.S. bullying.
A parallel measure of new export orders saw an even steeper decline, falling to 44.7 in April, the lowest since December 2022.