Economic uncertainties ahead of Donald Trump’s presidency have slowed down Chinese manufacturing activity in December, according to the latest report from the Caixin Insight Group.
Donald Trump has threatened to impose high tariffs on Chinese exports when he returns to the White House on January 20, 2025, as part of his efforts to address the significant trade deficit between the United States and China.
In 2022, the United States exported goods worth $195.5 billion to China and imported $562.9 billion worth of goods, leaving the country with a $367.4 billion trade deficit.
While this figure declined by 17% in 2023 due to China’s economic slowdown, economic uncertainties surrounding Trump’s presidency continue to influence market dynamics, with the majority of players holding back on investments to better assess the situation.
Manufacturing activity fell from 51.5 in November to 50.5 in December. Although the figure remained above the 50 mark, which indicates an expansion of activity, it was below the 51.7 projected by economists.
A senior economist at the Caixin Insight Group, Wang Zhe had attributed the contraction in economic activity to a slowdown in demand caused by uncertainties in the global economy.
He stated, “Exports dragged on demand amid mounting uncertainties stemming from the overseas economic environment and global trade.”
According to the Caixin report, weak export orders weighed on overall sales and business sentiment, forcing manufacturers to cut prices in an effort to bolster sales.
However, most economic watchdogs predict this move will put additional pressure on the second-largest economy, which is experiencing its longest deflation streak since 1999.
Chang Shu and David Qu, economists at Bloomberg, said, “Falling prices indicated by both surveys highlight the necessity of continuing policy support. We expect the government to step up fiscal support in 2025.”
