China's Factory Activity Slows As U.S. Tariffs Hit Export Orders

China's factory activity slowed at the beginning of the second quarter, dragged down by a sharp decline in new export orders and renewed job losses, according to a private-sector survey released.

The figures are slightly better than analysts’ expectations, but are the lowest reading since January. I Photo: Foxconn

The report by Ellen Zhang and Ryan Woo for Reuters suggests U.S. tariffs are starting to ripple through China’s vast manufacturing sector, while Beijing holds back on introducing new stimulus measures amid expectations of a prolonged trade war.

The Caixin/S&P Global Manufacturing Purchasing Managers’ Index (PMI) fell to 50.4 in April from 51.2 in March.

While this was slightly better than analysts’ expectations, it was the lowest reading since January.

A reading above 50 indicates expansion, while below signals contraction. The figure contrasted with China’s official PMI, which showed factory activity declining faster than expected in April.

“The ripple effects of the ongoing China-U.S. tariff standoff will gradually be felt in the second and third quarters,” said Wang Zhe, an economist at Caixin Insight Group.

“Policymakers should be well-prepared, with action taken sooner rather than later.” According to the survey, new export orders contracted at the sharpest rate since July 2023, contributing to only a marginal rise in total new orders.