China Experiencing Modest Factory Activity Increase Amid Tariff Concerns
China exhibits signs of increased factory activity amid looming tariff threats from the U.S. President Trump has already implemented a 20% tariff on Chinese goods, with an impending review of trade deal compliance. Experts indicate signs of economic contraction and call for policy support to mitigate the impacts of potential tariff increases.
Recent reports indicate a slight increase in China’s factory activity amidst looming tariff concerns. The Chinese government has warned the United States of potential retaliation if tariffs are imposed. Since the beginning of his second term in January, President Donald Trump has enacted tariffs reaching 20% on Chinese goods. A review of China’s adherence to the phase-one trade deal, initiated during Trump’s first term, is expected to conclude this week.
Data released by China last week revealed a contraction in profits for industrial firms at the start of the year, signaling potential economic challenges. Xing Zhaopeng, a senior strategist at Australia & New Zealand Banking Group, characterized the March PMI data as “a mixed bag,” noting that factories are reducing inventories and cutting imports. He anticipates a slowdown in momentum by the second quarter, emphasizing the necessity for policy support.
Zhaopeng asserted that if the impact of tariffs is significant, Chinese policy makers will reduce reserve requirements for banks “without hesitation.” In response to current market conditions, the onshore yuan experienced a modest increase of 0.16%, reaching a value of 7.2516 against the dollar.
In conclusion, China faces challenging economic conditions with the threat of U.S. tariffs potentially impacting factory activity. Experts believe that although there is slight growth, significant support from policymakers will be required to sustain momentum. The potential adjustment of bank reserve requirements may play a crucial role in stabilizing the economy amid these pressures.
Original Source: m.economictimes.com
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