Is Beijing gradually feeling the pinch of tariffs?

(Dan Tri Newspaper) - Newly released PMI figures show signs of a slowdown in China's manufacturing sector in May. Has the country already felt the impact of US tariffs?

China has just released data showing that its Purchasing Managers' Index (PMI) reached only 49.5 points in May. This is a slight increase from 49 points in April, but it remains below 50 – indicating a contraction in manufacturing activity.

The new orders index rose to 49.8 in May, up from 49.2 in April. The new export orders index also improved, increasing from 44.7 to 47.5. The non-manufacturing PMI, which includes the services and construction sectors, declined slightly from 50.4 to 50.3, but remained above the 50 threshold.

Zhao Qinghe, a senior expert at China's National Bureau of Statistics (NBS), said that some companies doing business with the US have reported a faster recovery in export orders, and overall import and export conditions have also shown signs of improvement.

According to the US-China agreement reached earlier this month, US tariffs on Chinese goods will be reduced from 145% to 30% within 90 days. This timeframe is expected to allow negotiators from both sides to reach a more sustainable agreement. For its part, China has also reduced tariffs on US goods from 125% to 10%.

Nevertheless, the remaining tariffs are still significantly higher than they were before Trump took office as US President. Furthermore, the tariff reduction agreement is only temporary, leaving businesses and investors questioning the sustainability of this "truce."

Chinese President Xi Jinping (Photo: Reuters).

US Treasury Secretary Scott Bessent said on May 29 that recent trade negotiations between the US and China have stalled.

"Businesses involved in international trade in both countries are operating in an environment of prolonged instability. This will negatively impact the growth prospects of both sides," Zhang Zhiwei, chief economist at Pinpoint Asset Management, said in a report.

Analysts predict Beijing will introduce further monetary and fiscal stimulus measures in the coming months to support growth and protect the economy from the impact of import tariffs.

The People's Bank of China (PBOC) has also announced several easing measures, such as lowering interest rates and injecting large amounts of liquidity into the banking system.

Recently, rating agency Moody's announced it is maintaining its negative outlook on China's credit rating. They are concerned that tensions with major trading partners could have a long-term impact on the country's creditworthiness.

Nevertheless, Moody's also noted that the Chinese government 's policies have addressed some previous concerns about the health of state-owned enterprises and local government debt.

In the first quarter, the Chinese economy also grew faster than expected, at 5.4%. The government is confident of achieving its GDP growth target of around 5% this year, despite concerns from analysts that US tariff policies could drag down the growth momentum.

Source: https://dantri.com.vn/kinh-doanh/bac-kinh-dang-dan-tham-don-thue-quan-20250602165537122.htm