China's factory activity contracts in May amid trade tensions, PMI at 49.5

While the manufacturing index indicated sector growth, the new orders index remained below 50, signalling ongoing weakness despite some improvement

China’s factory activity contracted in May, though the pace of decline eased compared to April as the country reached a deal with the United States to reduce former president Donald Trump’s steep tariffs, Associated Press reported. 

 

According to the National Bureau of Statistics, China’s purchasing managers index (PMI) increased from 49.0 in April to 49.5 in May. The PMI scale ranges from 0 to 100, with 50 marking the threshold between growth and contraction. While the manufacturing index indicated sector improvement, the new orders index remained below 50, signalling continued weakness despite some recovery. 

 

A senior statistician at the National Bureau of Statistics said firms engaged in US trade saw faster resumption of foreign orders, and import-export conditions showed signs of improvement.

 

Earlier this month, China and the US reached an agreement to reduce tariffs: Trump’s tariffs were cut from 145 per cent to 30 per cent for 90 days, allowing more time for detailed negotiations. China also lowered taxes on US goods from 125 per cent to 10 per cent. However, tariffs still remain higher than pre-Trump levels, and uncertainty lingers over whether the temporary truce will hold.

 

Trump: No longer ‘Mr. Nice Guy’ on China trade

 

US President Donald Trump declared on Friday that he would no longer be “Mr. Nice Guy” with China on trade, saying that China had broken its agreement with the United States. 

 

The specific agreement Trump referred to was not detailed. Posting on social media, he said, “The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!”

 

He acknowledged that the tariff reduction helped stabilise China’s economy and provided relief to US companies struggling under high import duties, which had previously hindered their ability to import Chinese goods and threatened their businesses.

 

These remarks highlight the persistent tensions between the world’s two largest economies, with Trump seeking to demonstrate that his tariffs yield tangible benefits such as boosting US manufacturing and encouraging domestic investment.

 

The administration also intensified its confrontation with China this week by announcing plans to revoke visas for Chinese students studying in the United States.

 

(With inputs from AP)