The official manufacturing industry survey released by the Chinese Communist Party on Wednesday (April 30) showed a contraction in China’s manufacturing activities in April, ending a two-month recovery trend after the conclusion of the Trump tariff case on China. At the same time, new export orders in April saw a significant decline, impacting employment.
The data released by the National Bureau of Statistics of the Chinese Communist Party on Wednesday showed that the official Purchasing Managers’ Index (PMI) for the manufacturing industry recorded 49 in April, indicating a contraction in manufacturing activities, and below the Reuters survey median forecast of 49.8.
A PMI reading above 50 implies expansion in manufacturing activities, while below 50 suggests contraction in activities.
Amid China’s economic softness, President Trump began imposing a 145% import tariff on most Chinese goods. Due to slow income growth and a prolonged real estate crisis, China is still struggling with monetary tightening.
Data from the National Bureau of Statistics of the Chinese Communist Party showed that the non-manufacturing PMI covering service and construction activities in China dropped from 50.8 in March to 50.4 in April. The sub-index tracking service activities decreased from 50.3 in March to 50.1 in April, while the sub-index for construction activities decreased from 53.4 to 51.9.
The sub-index for new export orders dropped from 49.0 in March to 44.7 in April, highlighting the impact of tariffs on Chinese exporters.
Since the end of the pandemic, Chinese policymakers have mainly relied on exports to support the fragile economic recovery. In the first quarter of this year, manufacturers had been shipping goods ahead of the tariff implementation, boosting exports in March to a five-month high. However, the arrival of tariffs marked the end of this strategy.
Also released on Wednesday, the Caixin China Manufacturing Purchasing Managers’ Index (PMI) recorded 50.4 in April, slightly above 50 but 0.8 percentage points lower than March, hitting the lowest level in nearly three months, indicating a slowdown in manufacturing expansion.
Caixin stated that the imposition of additional US tariffs had an impact on external demand, with the new export order index for the month falling into contraction territory, reaching the lowest level since August 2023. Weak external demand led to soft overall demand, with the new order index in April only slightly above the critical point.
After an increase in employment numbers in March, employment in the manufacturing sector in April saw a slight decline, attributed to resignations and restructuring plans adopted by companies to reduce scale and costs.
Former Chinese Premier Li Keqiang once stated in 2020 that the Chinese foreign trade industry directly or indirectly supported the employment of 180 million people.
The Chinese government has pledged support for exporters trying to shift sales to the domestic market, but some exporters have been reluctant to respond to these calls due to problems such as weak domestic demand, price wars, low profits, delayed payments, and high product return rates.
The Chinese Communist Party has repeatedly denied seeking negotiations with the United States to eliminate tariffs, opting for a tough stance in the trade war with the US. President Trump has stated that he imposed tariffs on Chinese goods to stop China from stealing job opportunities from the US; he believes that China steals more jobs from the US than any other country.
The International Monetary Fund, Goldman Sachs, and UBS have recently lowered their economic growth forecasts for China in 2025 and 2026, citing the impact of US tariffs. These institutions all do not believe that China’s economy can reach the growth targets set by the Chinese Communist Party.