China’s manufacturing activity in May showed a slowdown, with the official manufacturing purchasing managers’ index dropping to 50, a three-month low. The decline was attributed to a contraction in new export orders and rising input costs. The sub-indexes for production and new orders were estimated at 51.2 and 49.9, respectively.
Amid global uncertainties related to the Middle East conflict, new export orders fell to 48.6 from 50.3 during the month. The Chinese government is facing concerns over a supply-demand mismatch, as the previous growth driver of exports is losing momentum. Other countries, including major EU members, are considering measures to address the impact of cheap Chinese goods on their economies.
European countries like Spain, Italy, the Netherlands, France, and Lithuania are advocating for stronger actions to counter the influx of inexpensive goods from countries with industrial overcapacity, such as China. The European Commission is gearing up for a China policy debate to address the economic challenges posed by Chinese competition. The proposed measures include more aggressive use of EU safeguard mechanisms to tackle sector-wide disruptions caused by import surges.
