Export Orders Plummet to Pandemic Levels

April data from China’s National Bureau of Statistics indicates a significant decline in new export orders, hitting their lowest point since late 2022. This drop highlights the impact of heightened U.S. tariffs on various sectors. Factory managers have cited decreasing demand from international markets, leading to a sharp decline in the export orders subindex, which mirrors declines seen during the COVID-19 crisis.

• Export orders reached their lowest since December 2022

• Purchasing Managers Index (PMI) fell to 49.0, marking the first contraction in over a year

• Manufacturing activity registers at its weakest since late 2022

Assessing Tariff Effects and Economic Sentiment

While the U.S. tariffs on Chinese products have undeniably strained orders, analysts at Capital Economics point out that negative sentiment might also be intensifying these issues. The connection is evident: weaker international demand leads to factory slowdowns, prompting firms to reduce production and cut inventories.

“Even with increasing fiscal support, it won’t completely counterbalance the slowdown,” said economist Zichun Huang, predicting a modest 3.5% GDP growth for China this year.

Government Response and Future Indicators to Watch

In response to the economic downturn, Beijing has ramped up its commitment to stimulus measures, focusing on infrastructure spending and easing credit. However, investors will need to monitor how effectively these policies translate into tangible economic improvements. Upcoming releases related to stimulus initiatives and critical economic indicators—including future PMI and trade statistics—will provide insights on potential policy changes.

Short-Term Concerns

• Ongoing uncertainty over U.S.-China tariffs

• Declining global trade momentum

• Delays in fiscal stimulus implementation

As external pressures mount, observers should be on the lookout for further government stimulus actions and any advancements in U.S.-China negotiations to better understand whether China’s manufacturing sector can rally later this year.