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The trade war with China has sent US stocks on a rollercoaster ride and led to disputes about whether or not China is already discussing a trade deal. But the impact is also being felt in China. Last week there a report showed Chinese factories were slowing down in response to tariffs. Estimates of China’s annual growth are already being cut sharply.
Three weeks into a trade war that pushed import tariffs on Chinese-made goods to 145 percent, an official report on manufacturing activity signaled that in April, Chinese factories experienced the sharpest monthly slowdown in more than a year.
Zichun Huang, China economist at Capital Economics, said in a note to clients that the data “suggests that China’s economy is coming under pressure as external demand cools.” Steps the government is taking to pump money into the economy are “unlikely to fully offset the drag,” she said. Capital Economics forecasts the Chinese economy will grow 3.5 percent this year, well short of the government’s 5 percent growth target.
In a research report on Tuesday, Nomura Securities said that if Chinese exports to the United States dropped 50 percent, 5.7 million people in China could lose their jobs immediately. That number could grow to 15.8 million workers once the long-term effects rippled through the economy.
For many Chinese businesses, the tariffs have simply cut off the US market entirely.
Liu Miao has sold clothing on Amazon to wholesale buyers in the United States for the past five years. That trade has come to an abrupt stop.
Mr. Liu owns a small factory in Guangzhou, long the center of China’s highly competitive garment industry. He and other factory managers, already dealing with tight profit margins, said last week that the combination of tariffs and President Trump’s new tax on cheap imports had cut deeply into their businesses.
