China’s April manufacturing Purchasing Managers’ Index (PMI) has shown significant declines, primarily attributed to the ongoing trade war with the United States. The Institute for Supply Management’s manufacturing PMI also fell sharply, down 1.5 points to a two-year low of 49.0, down from March’s 50.5. This drop was greater than the consensus estimate of 49.7, which would have signaled a contraction in the manufacturing sector.
The export component of the manufacturing PMI took a huge dive. It fell more than four points, down to 44.7—a post-pandemic low. All of these figures show just how much Chinese manufacturers are struggling at the moment. They do argue that the trade war is having a dramatic effect on China’s economy.
The manufacturing sector isn’t the only one under attack. Most recently, in April, the services sub-index of China’s PMIs dropped to 50.1, down from 50.3 in March. Meanwhile, the construction sub-index registered a drop, slipping to a three-month low of 51.9 from March’s 53.4. These declines in the public and private sector further illustrate the economic crisis at hand.
Arjen van Dijkhuizen, an economist at ABN AMRO, emphasized the significance of these figures, stating, “This morning, China’s April PMIs were the first monthly macro data to show a clear hit from the escalation of the US-China trade war in the course of this month.” He explained the significance of these drops. In other words, they unmistakably telegraph the export shock associated with the intensified trade war.
Even with those disappointments, Van Dijkhuizen said he is encouraged by possible mitigation measures. He stated, “All in all, the drop in China’s April PMIs are clear signs of the export shock related to the escalated trade war, although we still expect exemptions, trade circumvention/diversification and the further stepping up of monetary and fiscal support to cushion the blow to some extent.” He further pointed out that these advances coincide with recent downgrades in China’s growth forecasts. So now, these same experts have downgraded that growth to just 4.1% in 2025 and 3.9% in 2026.
The reality that the pandemic has introduced a fascinating and challenging dynamic. China appears to be playing “hard to get” with possible trade negotiations with the US. The U.S. remains deeply engaged, seeking to coax China back to the negotiation table. It is still an open question as to whether or not these planned efforts will translate into constructive conversations.
The market has a voracious appetite for new information. Next on the PMI calendar is Caixin’s services and composite PMIs for April, due on May 6th. The new figures will provide important new information on China’s economic environment. They’ll all be providing insight into the country’s path forward, even in the face of mounting trade adversity.