China's official manufacturing Purchasing Managers' Index fell to 49.4 in April from 50.5 in March, the National Bureau of Statistics reported Wednesday morning, missing consensus expectations of 50.2 and slipping back into contraction territory for the first time since January. The non-manufacturing PMI also softened, declining to 51.1 from 52.4. The composite reading dropped to 50.4 from 51.7.
New export orders, a key sub-index, contracted at the sharpest pace since November 2023 at 47.8 versus 51.0 in March. The output sub-index declined to 49.6 from 51.7, while new orders fell to 49.0 from 51.6. Employment held in deeper contraction at 47.9. The data point to growing strain from the Trump administration's tariff regime, which extended Section 301 duties to additional Chinese tech-related categories on March 15.
Policy Response
Chinese authorities are widely expected to deploy further targeted easing in May. The People's Bank of China in March cut the seven-day reverse repo rate to 1.45% from 1.50% and lowered the reserve requirement ratio by 25 basis points. State media outlets including Xinhua and People's Daily flagged Wednesday afternoon that a Politburo meeting in late April will "set the policy tone for further countercyclical adjustment." Bond yields signaled this: the 10-year Chinese government bond yield fell 4 basis points to 1.92%.
The yuan slipped to 7.358 per dollar, the weakest reference rate since November 2023. The Hang Seng China Enterprises Index closed up 0.6% on hopes of stimulus, with Tencent (700.HK) +1.2% and Alibaba (BABA) +0.8%. The CSI 300 finished flat as profit-taking offset the policy-easing prospects.
Property and Consumer Caution
Property remains the principal drag. New-home sales by area in 30 major Chinese cities are running 22% below 2024 levels through April. Country Garden Holdings has publicly warned of further restructurings, while China Evergrande Group remains under court-led liquidation proceedings. Retail sales in March grew 4.8% year-on-year, decelerating from 5.6% in February, with consumer sentiment data softer across both first- and second-tier cities.