In a significant shift in tone, Chinese state media recently indicated that Beijing is prepared to engage in trade negotiations with Washington, amid growing concerns over the adverse effects of escalating trade tensions on China's economy. The announcement comes as China's manufacturing sector reported its steepest decline since 2023, with export orders dwindling, raising alarms about the country's reliance on foreign markets.
According to a report from the Financial Times, the social media channel Yuyuan Tantian, which is linked to China Central Television (CCTV), stated that China is not necessarily required to negotiate with the United States before Washington takes any concrete actions. The post, which referenced unnamed sources, claimed that U.S. officials have actively sought contact with China through various channels to initiate discussions on tariffs.
The urgency for negotiations appears to be more pronounced on the American side, as the report highlighted troubling economic data from the U.S., including port congestion and a GDP decline in the first quarter of 2025. This suggests that Washington may be feeling the pressure to resume negotiations sooner rather than later. "The door to negotiations is always open," Yuyuan Tantian wrote. "But if it's a fight, we are ready to go all the way."
Earlier, on April 29, U.S. Secretary of Commerce Howard Lutnick announced that the Trump administration had reached its first trade agreement. Observers noted that the tone of the recent Chinese statement reflects a more flexible stance compared to the previous week when the Ministry of Commerce insisted that the U.S. must lift high tariffs before any negotiations could commence.
Andrew Polk, co-founder of the consulting firm Trivium China, commented that the message from Beijing seems to be preparing both sides for a potential return to the negotiating table. Zichen Wang, a researcher at the Center for Globalization and China in Beijing, noted that using social media to signal policy is a relatively new strategy for China, although it has utilized similar approaches in past trade disputes with the U.S.
On the U.S. side, President Trump expressed his desire to speak with President Xi Jinping "at some point." However, Chinese officials clarified that the leaders could only meet if some consensus is reached beforehand. Despite this, both Washington and Beijing have denied recent claims by Trump that negotiations are already underway.
U.S. Trade Representative Jamieson Greer stated that no rounds of negotiations have taken place since Trump was inaugurated in January 2025. Trump remarked, "Right now, China is facing a lot of difficulties due to their factories not running smoothly." He also asserted that the U.S. does not need goods from China, despite warnings from major retailers like Walmart and Target that a trade war could leave them without products to sell.
As the trade conflict continues, both countries have attempted to mitigate the impacts by exempting certain essential goods, such as iPhones and industrial chemicals, from tariffs. However, the economic repercussions are becoming increasingly evident. The flow of goods at U.S. ports has sharply decreased, while many Chinese export factories have temporarily laid off workers.
In a related development, official surveys conducted by the China Federation of Logistics and Purchasing revealed that export orders slowed down significantly in April 2025, coinciding with the heightened tensions following Trump's imposition of tariffs as high as 145% on Chinese goods, with some items facing tariffs of up to 245%. In retaliation, China has imposed tariffs of up to 125% on U.S. goods, while also tightening the export of strategic minerals used in high technology.
CNBC reported that China's manufacturing activity fell more sharply than expected, reaching its lowest level in nearly two years, signaling a recession in April 2025. The National Bureau of Statistics of China announced that the official Purchasing Managers' Index (PMI) for April was only 49 points, the lowest in 16 months, down from 50.5 in March 2025. A PMI reading below 50 indicates a contraction in manufacturing activity.
Additionally, the official PMI for non-manufacturing activities, which includes services and construction, also saw a slight decrease, dropping from 50.8 points the previous month to 50.4 points in April 2025. A private survey by Caixin also reflected a decline in PMI to 50.4 from 51.2, indicating a slowdown in recovery momentum.
Caixin's report noted that in April, production and consumption slowed down, exports decreased, and employment contracted slightly. Businesses are attempting to reduce inventory, logistics have been delayed, and prices remain under pressure, contributing to a noticeable weakening of market sentiment.
Economist Zichun Huang from Capital Economics assessed that the sharp decline in PMI indicates that the Chinese economy is under significant pressure as external demand diminishes. Overall employment rates have decreased across most industries, except for the service sector, which saw a slight increase in jobs compared to March 2025, though it remains in recession at 46.8 points.
According to Chetan Ahya, Morgan Stanley's chief economist for the Asia region, trade flows between China and the U.S. have been severely disrupted following the rounds of retaliatory tariff increases. The number of container ships transporting goods from China to the U.S. has sharply declined in recent weeks, resulting in a year-on-year decrease.
Looking ahead, the Chinese government has set a target of maintaining a growth rate similar to the solid 5% achieved in 2024, despite major Wall Street banks lowering their GDP growth forecasts for China this year due to the ongoing trade war with the U.S. Capital Economics estimates that China's economy will only grow by 3.5% this year.
During a recent economic policy meeting, the Chinese government pledged to support businesses and workers most affected by the massive U.S. tariffs, emphasizing the need for more proactive fiscal policies and moderately loose monetary policies to stimulate the economy. Senior economic officials also committed to stronger interventions to mitigate the impact of U.S. tariffs.
However, economist Huang warned that these measures may not fully offset the negative impacts, predicting that China's economy will only grow by around 3.5% this year. Dan Wang, director of China at Eurasia Group, noted that to counteract the effects of tariffs, China may need to double its stimulus packages this year.
The trade war initiated by Trump is also raising the risk of recession in the U.S. and spreading its impact globally. The International Monetary Fund (IMF) recently lowered its global growth forecast, warning that the economic situation in the U.S. and worldwide is deteriorating due to trade tensions. The IMF projects global economic growth in 2025 will reach only 2.8%, a significant drop from the 3.3% figure projected in January.
