China's March Factory Activity Expands for First Time in Six Months

A woman wearing a face mask checks shoes in a shopping mall in Beijing, China, 31 March 2024. EPA/WU HAO
A woman wearing a face mask checks shoes in a shopping mall in Beijing, China, 31 March 2024. EPA/WU HAO
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China's March Factory Activity Expands for First Time in Six Months

A woman wearing a face mask checks shoes in a shopping mall in Beijing, China, 31 March 2024. EPA/WU HAO
A woman wearing a face mask checks shoes in a shopping mall in Beijing, China, 31 March 2024. EPA/WU HAO

China's manufacturing activity expanded for the first time in six months in March, an official factory survey showed on Sunday, offering relief to policymakers even as a crisis in the property sector remains a drag on the economy and confidence.
The official purchasing managers' index (PMI) rose to 50.8 in March from 49.1 in February, above the 50-mark separating growth from contraction and topping a median forecast of 49.9 in a Reuters poll.
Recent upbeat indicators suggest the world's second-largest economy is slowly getting back on better footing, leading analysts to start upgrading their growth forecasts for the year. Policymakers have wrestled with persistent economic sluggishness since the abandonment of China's strict COVID curbs in late 2022.
"March data show the economy is poised for a strong end to Q1," China Beige Book, an advisory firm, said in a note last week. "Hiring recorded its longest stretch of improvement since late 2020. Manufacturing picked up, as did retail."
However, a deep slump in the Asian giant's property sector remains a major drag on growth, testing the health of heavily indebted local governments and state-owned banks' balance sheets.
The official non-manufacturing PMI, which includes services and construction, rose to 53 from 51.4 in February, marking the highest reading since September.
Premier Li Qiang announced an ambitious 2024 economic growth target of around 5% earlier this month at the annual meeting of the National People's Congress, China's rubber-stamp parliament.
But analysts say policymakers will need to roll out much more stimulus to hit that target as they will not be able to count on the low statistical base of 2022 which flattered 2023 growth data.
Citi on Thursday raised its economic growth forecast for China for this year to 5.0% from 4.6%, citing "recent positive data and policy delivery".
China's cabinet on March 1 approved a plan aimed at promoting large-scale equipment upgrades and sales of consumer goods. The head of the country's state planner told a news conference earlier this month the plan could generate market demand of over 5 trillion yuan ($691.63 billion) annually.
Many analysts worry that China may begin flirting with Japan-style stagnation later this decade unless policymakers take steps to reorient the economy towards household consumption and market-allocation of resources, and away from the heavy reliance on infrastructure investments seen in the past.



Trump Says he’s Terminating Trade Talks with Canada over Tax on Tech Firms

Canadian Prime Minister Mark Carney speaks during a press conference during a NATO summit in The Hague, Netherlands June 25, 2025.  REUTERS/Toby Melville
Canadian Prime Minister Mark Carney speaks during a press conference during a NATO summit in The Hague, Netherlands June 25, 2025. REUTERS/Toby Melville
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Trump Says he’s Terminating Trade Talks with Canada over Tax on Tech Firms

Canadian Prime Minister Mark Carney speaks during a press conference during a NATO summit in The Hague, Netherlands June 25, 2025.  REUTERS/Toby Melville
Canadian Prime Minister Mark Carney speaks during a press conference during a NATO summit in The Hague, Netherlands June 25, 2025. REUTERS/Toby Melville

President Donald Trump said Friday that he’s suspending trade talks with Canada over its plans to continue with its tax on technology firms, which he called “a direct and blatant attack on our country.”

Trump, in a post on his social media network, said Canada had just informed

the US that it was sticking to its plan to impose the digital services tax, which applies to Canadian and foreign businesses that engage with online users in Canada. The tax is set to go into effect Monday.

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period,” Trump said in his post.

Trump’s announcement was the latest swerve in the trade war he’s launched since taking office for a second term in January. Progress with Canada has been a roller coaster, starting with the US president poking at the nation’s northern neighbor and repeatedly suggesting it would be absorbed as a US state.

Canadian Prime Minister Mark Carney said Friday that his country would “continue to conduct these complex negotiations in the best interests of Canadians. It’s a negotiation.”

Trump later said he expects that Canada will remove the tax, The Associated Press reported.

“Economically we have such power over Canada. We’d rather not use it,” Trump said in the Oval Office. "It’s not going to work out well for Canada. They were foolish to do it.”

When asked if Canada could do anything to restart talks, he suggested Canada could remove the tax, predicted it will but said, “It doesn’t matter to me.”

Carney visited Trump in May at the White House, where he was polite but firm. Trump last week traveled to Canada for the G7 summit in Alberta, where Carney said that Canada and the US had set a 30-day deadline for trade talks.

The digital services tax will hit companies including Amazon, Google, Meta, Uber and Airbnb with a 3% levy on revenue from Canadian users. It will apply retroactively, leaving US companies with a $2 billion US bill due at the end of the month.

“We appreciate the Administration’s decisive response to Canada’s discriminatory tax on U.S. digital exports,” Matt Schruers, chief executive of the Computer & Communications Industry Association, said in a statement.

Canada and the US have been discussing easing a series of steep tariffs Trump imposed on goods from America’s neighbor.

The Republican president earlier told reporters that the US was soon preparing to send letters to different countries, informing them of the new tariff rate his administration would impose on them.

Trump has imposed 50% tariffs on steel and aluminum as well as 25% tariffs on autos. He is also charging a 10% tax on imports from most countries, though he could raise rates on July 9, after the 90-day negotiating period he set would expire.

Canada and Mexico face separate tariffs of as much as 25% that Trump put into place under the auspices of stopping fentanyl smuggling, though some products are still protected under the 2020 US-Mexico-Canada Agreement signed during Trump’s first term.

Addressing reporters after a private meeting with Republican senators Friday, Treasury Secretary Scott Bessent declined to comment on news that Trump had ended trade talks with Canada.

“I was in the meeting,” Bessent said before moving on to the next question.
About 60% of US crude oil imports are from Canada, and 85% of US electricity imports as well.

Canada is also the largest foreign supplier of steel, aluminum and uranium to the US and has 34 critical minerals and metals that the Pentagon is eager to obtain.

About 80% of Canada’s exports go to the US.

Daniel Beland, a political science professor at McGill University in Montreal, said it is a domestic tax issue, but it has been a source of tensions between Canada and the United States for a while because it targets US tech giants.

“The Digital Services Tax Act was signed into law a year ago so the advent of this new tax has been known for a long time,” Beland said. "Yet, President Trump waited just before its implementation to create drama over it in the context of ongoing and highly uncertain trade negotiations between the two countries.”