HONG KONG (Reuters) – Manufacturing activity remained relatively solid in major Asian economies such as China and Japan in April, but exports showed signs of weakness across the region, a worrying development given heightened Sino-US trade tensions.
High-level US and Chinese officials meet in China this week, with trade expected to be top of the agenda as both sides have threatened reciprocal tariffs on hundreds of billions of dollars worth of imports.
The meetings’ outcome could be crucial for the outlook for Asian exporters as Purchasing Managers Index (PMI) surveys of factory activity are already pointing to a slowdown.
“What we’re seeing is a cyclical soft patch in exports after a very strong rise last year,” said Dong Chen, senior Asia economist at Pictet Wealth Management.
“Without considering the potential trade war, we’re not very worried about it, we think it’s fairly normal. But if we think about the trade war … then the outlook is quite uncertain. It could potentially bring more damage going forward.”
Tensions between the US and China escalated earlier this year, when President Donald Trump threatened tariffs on up to $150 billion of Chinese goods to punish China over unfair joint-venture and intellectual property practices.
China, which denies allegations it coerces technology transfers through these channels, has threatened equal retaliation, including tariffs on US soybeans and aircraft.
A Trump administration delegation including Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and advisers Peter Navarro and Larry Kudlow is heading to China for talks.