China’s Factory Activity Experiences Moderate Decline in May Amid U.S. Trade Negotiations

BEIJING (AP) — In a recent report by the National Bureau of Statistics, it was revealed that China’s factory activity contracted in May. However, the decline was less severe compared to April, coinciding with a significant deal reached between China and the United States aimed at reducing hefty tariffs imposed by former President Donald Trump.

Purchasing Managers Index Shows Slight Improvement

The Purchasing Managers Index (PMI) advanced from 49.0 in April to 49.5 in May. The PMI operates on a scale from 0 to 100, where a figure above 50 indicates expansion and below 50 signals contraction. This increase suggests a moving away from deeper negative territory, though it indicates that the manufacturing sector is still facing challenges.

Manufacturing Index: Mixed Signals

While the overall manufacturing index indicated some growth, the specific index measuring new orders remained below the crucial 50 mark. Despite some improvements in certain areas, the persistence of these lower figures suggests that many sectors within manufacturing are still struggling.

Impact of U.S.-China Trade Deal

According to senior statistician Zhao Qinghe, several companies engaging in trade with the U.S. reported an upturn in foreign trade orders. Furthermore, there has been a notable enhancement in import and export conditions, attributed to the recent trade agreement. This deal, finalized earlier this month, sees Trump’s tariffs slashed from an astounding 145% to a more manageable 30% for a temporary period of 90 days. In turn, China reduced its tariffs on American goods from 125% to 10%.

Lingering Uncertainty in Trade Relations

Despite the positive moves, uncertainties loom as the remaining tariffs still exceed levels prior to Trump’s presidency. Businesses and investors remain cautious, contemplating whether this trade truce will endure. Trump’s recent declarations suggest a potential escalation in trade tensions; he vowed to abandon the ‘Mr. NICE GUY’ approach, accusing China of breaching an unspecified agreement.

U.S.-China Relations Under Strain

In further developments, the relationship between the two nations has soured following the U.S. announcement to start revoking visas for Chinese students. This action drew protests from China, which labeled the decision as unreasonable. As Trump noted his intention to discuss these matters with Chinese President Xi Jinping, the path towards a more stable trade environment remains fraught with challenges.