Trump’s policies are clearly stepping up the pressure on China’s economy. Despite China’s brave face in public, I wonder how much longer they are going to be able to keep this up:
Profits for China’s industrial firms shrank in April as slowing manufacturing activity halted the previous month’s surge, putting more pressure on policymakers to step up support for an economy hit by a bitter trade war with the United States.
Earnings at China’s key manufacturing sector have been declining since November last year, with the exception of March, as both domestic and global demand slackened.
For the first four months, industrial firms notched up profits of 1.81 trillion yuan, down 3.4% from a year earlier, compared with a 3.3% drop in the first quarter this year.
The contraction in profits was in line with the weak growth in industrial output in the January-April period. Weak fixed-asset investment has also stoked worries about demand as have new factory orders, which remained sluggish in April, while exports have fallen on a sharp drop in shipments to the United States.
Iris Pang, Greater China Economist at ING, said the broadening rift between China and the United States over Huawei along with increasing concerns in other countries about the security of Huawei’s products will hit China’s exports as well as earnings of its telecom sector.