China's manufacturing sector experienced its most significant contraction in 16 months in April due to the impact of 145% US tariffs, highlighting the severe damage to the export-driven economy and prompting calls for fresh economic stimulus. The manufacturing Purchasing Managers' Index (PMI) fell to 49.0, indicating contraction, while new export orders dropped to their lowest since late 2022. Despite efforts to maintain confidence, the Chinese economy faces challenges from weak domestic consumption and a property crisis. Beijing is rolling out modest measures to boost growth, including credit access and domestic consumption initiatives, though it has stopped short of aggressive nationwide stimulus. Meanwhile, Chinese officials, rejecting a tariff truce, have criticized the US's stance, emphasizing the need for a firm response to American trade policies.

China's factory activity contracted sharply in April, with the manufacturing PMI dropping to 49.0, the weakest since December 2023, due to US tariffs, indicating a significant impact on the manufacturing sector.

The contraction is attributed to external factors, notably the steep 145% tariffs imposed by the US, which have led to order cancellations and production cuts, raising concerns about China's economic growth prospects.

Chinese officials are trying to project confidence amid the trade war, but the economy is struggling with issues like low domestic consumption and an ongoing property crisis, further exacerbating economic challenges.

While the non-manufacturing sectors showed marginal growth, the overall economic outlook is bleak, with new export orders falling to 44.7, the lowest since the post-Covid period in late 2022.

In response, the Chinese government is planning to intensify fiscal and monetary measures, though it has not yet implemented aggressive nationwide stimulus, instead focusing on targeted support to boost consumption and alleviate exporter pressures.

Chinese Foreign Minister Wang Yi has dismissed calls for a negotiated tariff truce, arguing that yielding to US threats would only encourage further bullying, aligning with a broader message against American trade tactics.

US President Donald Trump has justified the high tariffs, claiming they are deserved and suggesting that China would absorb the costs, despite the severe impact on China's ability to conduct business with the US.