PRC FACTORIES SLOW AS TRADE WAR TAKES ITS TOLL
A new survey of industrial firms by China's National Bureau of Statistics reveals how the U.S. trade war is hurting the country's manufacturing output and employment. The PRC's manufacturing purchasing managers’ index fell to 49.0 in April, down from 50.5 in March – an indication that the sector is contracting. The data on new export orders hit its lowest point since the COVID-19 pandemic, and manufacturing employment fell to February 2024 levels. The new report "suggests that China's economy is coming under pressure as external demand cools," and steps Beijing is taking to pump money into the economy are "unlikely to fully offset the drag," writes Zichun Huang of Capital Economics. If China's exports to the U.S. drop by 50%, then 5.7 million Chinese workers will immediately lose their jobs. Another 15.8 million workers would likely be cut as the long-term effects ripple through the economy. (New York Times, April 30, 2025)
BEIJING PUMPS CASH INTO THE CHINESE ECONOMY
Beijing has announced new stimulus measures, including interest rate cuts and a major liquidity injection. To cut borrowing costs, the People's Bank of China (PBOC) lowered its benchmark interest rate by 10 basis points to 1.40%, and the amount of cash that banks must hold, the reserve requirement ratio (RRR), will also be cut by 50 bps to 6.2%. PBOC Governor Pan Gongsheng said the RRR cut will release 1 trillion yuan ($138 billion) in liquidity. He said the central bank will set up low-cost lending facilities to purchase tech-related bonds and invest in elderly care services. Similar existing tools to support agriculture and small businesses will be enhanced, Pan said. Moreover, the chairman of the China Securities Regulatory Commission, Wu Qing, announced help for listed companies affected by tariffs. And Li Yunze, the head of the National Financial Regulatory Administration, said Beijing will permit insurance companies to invest an additional 60 billion yuan ($8.31 billion) in the stock market. (Reuters, May 7, 2025)
TAIPEI CRACKS DOWN ON PRC ID HOLDERS
Amid fears of PRC propaganda and espionage, Taiwan is cracking down on citizens holding PRC identity documents and placing its Chinese-born residents under enhanced scrutiny. Taipei has revoked the residency of at least twenty people, including three Chinese-born women who were calling for a Chinese takeover of Taiwan on social media. It has long been illegal for Taiwan residents to hold PRC identity documents, but in December a documentary revealed that PRC localities were offering IDs to large numbers of Taiwanese people. Taipei denounced the scheme as "China's evil united front work that attempts to create an illusion that it has authority over the nation." Many of the 380,000 Chinese-born people now living in Taiwan are married to Taiwanese citizens, and about half are permanent residents. (Guardian, April 26, 2025)
CHINA INTERFERING IN PHILIPPINE ELECTIONS – MANILA
The Philippines is blaming China for meddling in its midterm local and national elections. The office of the president has ordered "a swift and thorough investigation" into accusations that China is "amplifying divisive political discourse." During a Senate hearing, Senator Francis Tolentino accused the PRC embassy of hiring "keyboard warriors." "These troll farms... act as a covert disinformation and influence operation against the Philippine government and the Filipino people," Tolentino said. "Information operations are being conducted that are Chinese state-sponsored in the Philippines and are actually interfering in the forthcoming elections," said a national security official. The fake accounts amplify sympathy for former President Rodrigo Duterte, who was arrested in March and turned over to the International Criminal Court. (The Diplomat, May 2, 2025)
CHINA AND EGYPT HOLD FIRST JOINT AIR FORCE EXERCISES
PLA jets, helicopters and transport planes flew over the Giza pyramids during China's first ever joint exercises with the Egyptian air force, dubbed "Eagles of Civilisation 2025." A video report from CGTN called the 18-day drills "a signal of deepening military ties and shifting alliances," noting that "as Egypt looks beyond its traditional U.S. partnership, a new era of cooperation is taking flight over Cairo's skies." The drills, which the PLA air force described as "a significant milestone in military cooperation between the two countries," come as Cairo is looking to upgrade its equipment and assert itself as a regional power. China is already manufacturing satellites and military-grade surveillance equipment in Egypt. (MSN, May 6, 2025)