Chinese economic data expected to show an uptick in manufacturing activity for March

Chinese manufacturing data for March will be released today. The report is expected to show a slight increase in manufacturing activity, signalling a rebound in the world’s second largest economy despite increasing restrictions on pollution and government stimulus.

Coming amidst central government efforts to ease high-levels of pollution, as well as unprecedented trade-tensions with the US, March consensus forecasts expect the PMI to increase from 50.3 to 50.6. Data above 50 is generally consistent with an expansion in manufacturing activity and is expected to be a bellwether for trade data with the US coming later in April. However, due to US tariffs taking effect last week, upcoming trade data for the current quarter will be crucial in determining the economy’s vulnerability. Whilst the $55 billion in US measures includes tariffs in basic production, it will be harder to determine their impact upon more near-time high-tech manufacturing.

Despite announcing retaliatory tariffs, Beijing’s more studied response highlights the likelihood that the US measures are unlikely to dampen the government’s economic growth targets for the year. Additionally, the opportunity for cooperation with the US in upcoming talks with North Korea raises the possibility that the US measures could only be temporary in nature.