Impact of US tariff hikes on China's manufacturing sector controllable
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E-mail Xinhua, May 28, 2019
Tariff hikes by the United States will to some extent result in an increase of enterprise operation costs, lower competitiveness and fewer orders, but their impact on China's manufacturing sector is generally controllable, a senior official told Xinhua in an interview.
The 200 billion U.S. dollars worth of Chinese goods on which the United States imposed additional tariffs accounts for 41.8 percent of China's exports to the country, but only 8 percent of China's total exports, said Wang Zhijun, vice minister of industry and information technology.
Moreover, about half of the affected enterprises are foreign-funded enterprises, including many American companies, said Wang.
In other words, the tariff hikes hurt not only the interests of Chinese enterprises and consumers, but also U.S. companies and consumers as well as the global supply chain, said Wang.
Latest statistics from the National Bureau of Statistics (NBS) showed that the value added by China's major industrial firms increased 5.4 percent year on year in April, beating market expectations and posting an optimized structure.
In addition, the purchasing managers' index for the manufacturing sector held steady at 50.1, remaining within the expansion range.
NBS statistics also showed that profits of China's major industrial firms fell 3.7 percent year-on-year in April, thanks to a higher base in April last year and an earlier unleash of the market demand in March as lower value-added tax rate was implemented on April 1.
Li Chao, an analyst with Huatai Research Institute, said that industrial profits would return to the positive territory, but how fast will depend on market demand, prices and the policy incentives of tax cuts and fee reductions.
"Trade frictions may amplify short-term fluctuations but will not impact the long-term trend of asset prices based on what happened during the U.S.-Japan and U.S.-EU trade frictions," Li said.
As enterprises may continue to foreload their exports, the data will not worsen in the second quarter, he said.
Better structure
Based on figures from April, China's manufacturing sector has seen improving structure and efficiency. Among the 41 sub-sectors, 27 saw higher profits and 14 reported lower earnings in April.
On the positive side, consumer product manufacturers and equipment producers maintained relatively fast profit growth, reflecting structural improvement.
In the period, major special-purpose equipment producers recorded a 17.9 percent profit growth, while electrical machinery and device producers' profits climbed 14.5 percent.
The structural change was in line with a shift in China's economic growth drivers from exports and investment to domestic consumption and high-end industries, analysts said.
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