China's April manufacturing growth seen ebbing slightly, trade war a risk

BEIJING (Reuters) - Growth in China's vast manufacturing sector is expected to have eased slightly in April, as factory-gate prices stayed subdued in a possible sign of slowing domestic demand, while a simmering Sino-U.S. trade row heightened risks for the industrial sector.

Asia's economic powerhouse has led a synchronized uptick in global growth over the past year and a half, led by solid exports and a booming construction sector, though Chinese policy makers have had to walk a tight rope between defusing financial risks and keeping output broadly stable.

The official manufacturing Purchasing Managers' Index (PMI) is seen down at 51.3 in April from 51.5 in March, according to the median forecast of 26 economists in a Reuters poll. The 50-mark divides expansion from contraction on a monthly basis.

Rising tensions between China and the United States threaten to hit billions of dollars in cross-border trade. Analysts say these risks seem to have encouraged some Chinese exporters to ship out goods in early 2018, helping bump up China's export numbers for January-February.

Exports are expected to have rebounded in April from a weak March outcome, as shipments normalized thanks to still-solid global demand.

"We expect April economic indicators to have improved from March, particularly in exports where we are very likely to see a reversal of March's negative growth," said Lisheng Wang, a Hong Kong-based economist at Nomura.

Risks to growth, however, have risen in the wake of the U.S.-China trade dispute. While analysts say it is too early to gauge the potential fallout of the tariff standoff with the United States, a dent to business confidence could impinge on economic momentum.

Indeed, while the economy has displayed remarkable resilience in 2017 and early this year, signs of stress have shown up in softer industrial demand, slower investment growth, and a subdued property market. This is backed up by expectations that weaker producer prices will have persisted in April in line with a broader cooling in output.[L3N1S23AA]

Economists expect growth in the world's second-largest economy to ease to 6.5 percent this year, from 6.9 percent in 2017, with a regulatory crackdown on the country's finance sector and the Sino-U.S. trade row seen as key risks, a Reuters poll showed.

Separately, a private survey on China's factory activity for April is forecast to show a similar easing trend as the official reading.

The private Caixin/Markit Manufacturing Purchasing Managers' index (PMI) is expected to have eased to 50.8 in April versus 51 in March.

The official PMI survey is due out on April 30, along with a similar official survey on services.

The private Caixin manufacturing PMI will be published on May 2, and the Caixin services PMI on May 4.

(Reporting by Stella Qiu and Ryan Woo; Polling by Wang Jing and Shaloo Shrivastava; Editing by Shri Navaratnam)