BEIJING (AP) – China’s factory activity experienced contraction in May, as indicated by an official survey released on Saturday. However, this decline showed signs of slowing compared to April, coinciding with a recent deal reached between China and the United States aimed at reducing former President Donald Trump’s high tariffs.
According to the National Bureau of Statistics, China’s Purchasing Managers Index (PMI) rose from 49.0 in April to 49.5 in May. The PMI is assessed on a scale of 0 to 100, where a score of 50 signifies the boundary between expansion and contraction in manufacturing activity. Despite the improvement, the index reflecting new orders remained under 50, highlighting ongoing concerns within the sector.
National Bureau of Statistics senior statistician Zhao Qinghe noted that some companies engaged in business with the U.S. reported an accelerated resumption of foreign trade orders, alongside improved conditions for imports and exports. This optimism follows the U.S.-China agreement reached earlier in May, which resulted in a significant reduction of tariffs imposed by Trump—from 145% to 30% for 90 days. This period aims to provide both parties with the opportunity to negotiate a more comprehensive agreement, while China also lowered its tariffs on U.S. goods from 125% to 10%.
Despite these adjustments, the remaining tariffs are still higher than what they were prior to Trump taking office, leaving businesses and investors in a precarious position marked by uncertainty regarding the sustainability of this truce. President Trump has indicated his approach may shift, declaring on social media that he would no longer adopt a “Mr. NICE GUY” attitude towards China, alleging that the country has violated an unspecified agreement with the United States.
During a discussion in the Oval Office, Trump mentioned his intention to speak with Chinese President Xi Jinping, expressing hope for a resolution while maintaining his stance that China had breached their agreement. Additionally, tensions have escalated in the past week after the U.S. announced plans to begin revoking visas for Chinese students studying in the country. In response, China lodged a formal protest against the U.S. decision, deeming it unreasonable.
The factory activity data and the diplomatic climate underscore the fraught relationship between the two global economic powers. As both nations strive to navigate their trade relations, the future of their agreement and the broader implications for global trade remain complex and uncertain.
