In the current month, factory activity in China showed growth rates, which turned out to be the fastest in a year.
The mentioned indicator is definitely good news for the economic system of the Asian country, which is the second-largest in the world. The rapid growth rate of factory activity was recorded on the eve of a new stage of tightening the tariff policy of the United States, which is expected to cause even more strain on trade ties.
The official manufacturing purchasing managers’ index in China in March was fixed at the 50.5 mark. The relevant information was published by the National Bureau of Statistics on Monday, March 31. In February, the mentioned indicator was 50.2. It is worth noting that the consensus forecast of economists surveyed by the media predicted that the official manufacturing purchasing managers’ index in China would reach 50.4 in March. Any number above 50 points indicates growth.
The non-manufacturing measure of activity in the construction and services sectors in the Asian country in March was recorded at the 50.8 mark. In February, the corresponding indicator was 50.4. The consensus forecast of economists surveyed by the media predicted that the mentioned figure in China would reach 50.6 in March.
The purchasing managers’ index reflects the condition of the Asian country’s economic system just before the administration of United States President Donald Trump is expected to impose reciprocal tariffs. According to media reports, Beijing has warned Washington that it will take retaliatory measures if the US continues to tighten its trade policy on imported goods. It is worth mentioning that Donald Trump has already imposed tariffs totaling 20% on products shipped from an Asian country.
The United States is also set to complete a review this week of China’s compliance with the phase-one trade deal struck during Mr. Trump’s first term. Last week, data was published according to which the profits of industrial companies in the Asian country fell at the beginning of the current year. Industrial profits in China decreased by 0.3% in the first two months of 2025 compared to the figure recorded in the same period of 2024. This is an alarming signal in the context of the future prospects of the world’s second-largest economy.
Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd., described the March data on the purchasing managers’ index as a mixed bag. The expert noted that in the Asian country, factories are destocking at cheaper prices while they cut the amount of imports and raw material inventory. Xing Zhaopeng expects the momentum to slow a bit in the second quarter of 2025, and policy support will be required. According to the expert, China’s policymakers will lower the amount of funds banks must hold in reserve without hesitation if the tariff shock is big.
The onshore yuan rose 0.16% to 7.2516 versus the dollar on Monday. The benchmark CSI 300 Index fell 0.7% as stocks in Asia sold off amid concerns about the potential consequences of a tariff confrontation between Beijing and Washington.
Last week, the head of the People’s Republic of China, Xi Jinping, hosted a meeting with dozens of executives from top global companies, including Stephen A. Schwarzman of Blackstone Inc. and Jay Y. Lee of Samsung Electronics Co. In this case, there is a desire by Beijing to stop the decline in foreign investment in the Asian country. The mentioned circumstance hinders China’s economic growth.
Xi Jinping called on the executives to push back against protectionism. According to media reports, many companies, including those based in the United States, negatively perceive Washington’s tightening trade policy. It is possible that China intends to use this conjuncture to position itself as a reliable geopolitical player with whom it is beneficial to cooperate from the point of view of the economic aspect of the relevant interaction.
Chinese Premier Li Qiang said this month that the Asian country is prepared for shocks that will exceed expectations. He also expressed confidence that the Chinese government will be able to achieve its economic growth target of about 5% in 2025.
The media, citing economists, said that perhaps Beijing will face the need to unleash trillions of yuan to stimulate the economy. These measures may become unavoidable as a tool to achieve the goal of economic growth if tariffs increase.
