China's Manufacturing Activity Contracts Amid Trade Tension

An elderly woman shops in a supermarket in Beijing, China, 30 May 2025. EPA/WU HAO
An elderly woman shops in a supermarket in Beijing, China, 30 May 2025. EPA/WU HAO
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China's Manufacturing Activity Contracts Amid Trade Tension

An elderly woman shops in a supermarket in Beijing, China, 30 May 2025. EPA/WU HAO
An elderly woman shops in a supermarket in Beijing, China, 30 May 2025. EPA/WU HAO

China's manufacturing activity contracted in May for a second month, an official survey showed on Saturday, fuelling expectations for more stimulus to support the economy amid a protracted trade war with the United States.

The official purchasing managers' index (PMI) improved slightly to 49.5 in May from 49.0 in April but stayed below the 50-mark separating growth from contraction, in line with a median forecast of 49.5 in a Reuters poll.

On Friday, US President Donald Trump accused China of violating a two-way deal to roll back tariffs and unveiled a doubling of worldwide steel and aluminium tariffs to 50%, once again rattling international trade.

"Recent developments between China and the United States suggest bilateral relations are not improving," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

"Firms in China and the United States with exposure to international trade have to run their business under persistently high uncertainty. It will weigh on the growth outlook in both countries."

The new orders sub-index rose to 49.8 in May from 49.2 in April, while the new export orders sub-index rose to 47.5 from 44.7.

Some firms reported a noticeable rebound in trade with the United States, with improvements in both imports and exports, said senior NBS statistician Zhao Qinghe.

The non-manufacturing PMI, which includes services and construction, fell to 50.3 from 50.4, staying above the 50-mark separating growth from contraction.

Analysts expect Beijing to deliver more monetary and fiscal stimulus over the coming months to underpin growth and insulate the economy from the tariffs.

Interest rate cuts and a major liquidity injection were among easing steps unveiled by the central bank this month.

Beijing and Washington have agreed to a 90-day pause during which both would cut import tariffs, raising hopes of easing tension, but investors worry negotiations will be slow amid persistent global economic risks.

Trump's decision to single out China in his global trade war has stirred major worries about an economy that has been reliant on an export-led recovery to drive momentum in the face of weak domestic demand and deflationary pressures.

On Monday, rating agency Moody's maintained its negative outlook on China, citing unease over tensions with major trade partners could have a lasting impact on its credit profile.

But it acknowledged that government policy had tackled its previous concerns about the health of state-owned firms and local government debt that prompted a downgrade in late 2023.

China's economy expanded faster than expected in the first quarter, and the government has maintained a growth target of about 5% this year, but analysts fear US tariffs could drive momentum sharply lower.

Exports beat forecasts in April, buoyed by demand for materials from overseas manufacturers who rushed out goods to make the most of President Trump's 90-day tariff pause.



Japan Plans 'World First' Deep-sea Mineral Extraction

The Chikyu, pictured here in 2013, will drill around the remote island of Minami Torishima. TOSHIFUMI KITAMURA / AFP/File
The Chikyu, pictured here in 2013, will drill around the remote island of Minami Torishima. TOSHIFUMI KITAMURA / AFP/File
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Japan Plans 'World First' Deep-sea Mineral Extraction

The Chikyu, pictured here in 2013, will drill around the remote island of Minami Torishima. TOSHIFUMI KITAMURA / AFP/File
The Chikyu, pictured here in 2013, will drill around the remote island of Minami Torishima. TOSHIFUMI KITAMURA / AFP/File

Japan will from January attempt to extract rare earth minerals from the ocean floor in the deepest trial of its kind, the director of a government innovation program said Thursday.

Earlier this week the country pledged to work with the United States, India and Australia to ensure a stable supply of critical minerals, as concern grows over China's dominance in resources vital to new technologies.

Rare earths -- 17 metals difficult to extract from the Earth's crust -- are used in everything from electric vehicles to hard drives, wind turbines and missiles.

China accounts for almost two-thirds of rare earth mining production and 92 percent of global refined output, according to the International Energy Agency.

A Japanese deep-sea scientific drilling boat called the Chikyu will from January conduct a "test cruise" to retrieve ocean floor sediments that contain rare earth elements, said Shoichi Ishii, director of Japan's Cross-ministerial Strategic Innovation Promotion Program.

"The test to retrieve the sediments from 5,500 meters (3.4 miles) water depth is the first in the world," he told AFP.

"Our goal... of this cruise is to test the function of all mining equipment," so the amount of sediment extracted "doesn't matter at all", Ishii added.

The Chikyu will drill in Japanese economic waters around the remote island of Minami Torishima in the Pacific -- the easternmost point of Japan, also used as a military base.

Japan's Nikkei business daily reported that the mission aims to extract 35 tons of mud from the sea floor over around three weeks.

Each ton is expected to contain around two kilograms (4.4 pounds) of rare earth minerals, which are often used to make magnets that are essential in modern electronics.

Deep-sea mining has become a geopolitical flashpoint, with anxiety growing over a push by US President Donald Trump to fast-track the practice in international waters.

Beijing has since April required licenses to export rare earths from China, a move seen as retaliation for US curbs on the import of Chinese goods.

Environmental campaigners warn that deep-sea mining threatens marine ecosystems and will disrupt the sea floor.

The International Seabed Authority, which has jurisdiction over the ocean floor outside national waters, is meeting later this month to discuss a global code to regulate mining in the ocean depths.