China’s manufacturing engine is sputtering, with new data revealing the most severe hit to China’s economy since the COVID shutdown.
The country’s economy slipped from growth to contraction after the Purchasing Managers’ Index (PMI) fell below 50 in April. New export orders sank to their lowest level since December 2022 when China was still under lockdown, according to figures reviewed by the Wall Street Journal. Major financial institutions including UBS and Goldman Sachs have slashed their growth forecasts for China.
The numbers are the latest sign yet that Trump’s trade crackdown may be starting to work.
“It’s definitely worse than expected. It shows tariffs started to bite,” Robin Xing, chief China economist at Morgan Stanley, said on Bloomberg Television.
The latest downturn comes after earlier warning signs showed signs of trouble. Chinese cargo shipments had fallen by as much as 60% according to recent reporting from Bloomberg. Goldman Sachs estimates up to 16 million jobs in China could be wiped out as a direct result of Trump’s trade crackdown.
Trump initially imposed a 10% tariff on Chinese goods in February, then steadily raised it as Beijing retaliated with its own tariffs. When he offered most countries a 90-day freeze to negotiate, China was denied the pause. Instead, Trump hiked their tariffs even higher.
“At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable,” he wrote on Truth Social.
The U.S. currently imposes a 145% tariff on Chinese goods, and China collects a 125% tariff on American products.
Chinese President Xi Jinping is projecting defiance, vowing China will “never kneel” to Washington.
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