China’s factory activity slowed in April, attributed to global economic shifts amidst escalating trade tensions with the United States. The imposition of high US tariffs and Beijing’s retaliatory duties led to a surge in Chinese exports before the tariffs took effect. The Purchasing Managers’ Index (PMI) for April dropped to 49.0, the lowest since December 2023, indicating a contraction in industrial output.

Economists warn that the trade disruptions between the US and China could impact businesses, raise consumer prices, and potentially trigger a global recession. The weak manufacturing PMI in April is seen as a direct result of the trade war, impacting macro data in both countries. China’s economy, facing challenges from the pandemic, sluggish domestic demand, and a property sector crisis, is expected to expand by just 3.5% this year despite government efforts to stimulate growth.

With external demand cooling, China’s economy is under pressure, prompting the government to implement fiscal support measures. Despite aggressive stimulus measures and growth targets, the IMF, Goldman Sachs, and UBS have revised down their economic growth forecasts for China, citing the effects of US tariffs. These revisions suggest that the Chinese economy may not achieve the official growth target set by Beijing.

Overall, the article highlights the complex interplay of trade dynamics, economic challenges, and policy responses shaping China’s economic outlook amidst the ongoing trade war with the United States.