China’s factory activity expanded for a second straight month in April, according to an official survey released Thursday, indicating continued robust capital accumulation for Chinese companies despite global economic volatility and higher energy prices stemming from the Iran war.
The official manufacturing purchasing managers index (PMI) registered 50.3 in April, a slight dip from 50.4 in March, but still exceeding economists' expectations. A reading above 50 on the 0-100 scale signifies expansion. The new orders sub-index slowed to 50.6 from 51.6 in March, while the sub-index on production saw a slight increase to 51.5.
Leah Fahy, senior China economist at Capital Economics, noted in a research brief this week that elevated oil prices have not hindered industrial activity in China. Instead, the recent acceleration in industrial production appears to be driven by strong export demand. Fahy also observed that surging oil prices are fueling global demand for green technology, which directly benefits Chinese companies that dominate the manufacturing of clean energy equipment, securing their position in this expanding market.
Capital's Resilience Amidst Global Instability
A private sector PMI survey conducted by S&P Global and RatingDog, a Chinese credit research and analysis firm, reported an even more significant expansion, with China’s factory activity rising to 52.2 in April, up from 50.8 in March. This survey primarily focuses on smaller, export-oriented private companies, highlighting the strength of this segment of capital.
Further bolstering export prospects, U.S. tariffs on China were lowered earlier this year following a Supreme Court ruling against U.S. President Donald Trump’s sweeping tariffs. This development, according to Fahy, could lead to an increase in China’s exports to the U.S. in the coming months. A planned visit by Trump to Beijing next month to meet with Chinese leader Xi Jinping is anticipated to extend a year-long trade truce established between the two leaders late last year, further stabilizing conditions for transnational capital flows.
China’s economy expanded at a 5% annual pace in January-March, the same year, accelerating from the previous quarter and surpassing economists’ estimates. This growth trajectory supports the state-set economic growth target for 2026, which ranges from 4.5% to 5%, the lowest target since 1991. The nation recorded an all-time high of $1.2 trillion trade surplus last year, demonstrating significant surplus extraction through international trade.
Uneven Development and Domestic Costs
While exports remain robust, a prolonged property sector slump has continued to weigh on domestic investment and consumption. This indicates an uneven distribution of economic activity, where the benefits of strong export performance and capital accumulation do not fully translate into improved conditions for domestic consumption, implicitly impacting the working class and general population. The state's focus on export-driven growth and managing international trade relations prioritizes the interests of industrial and financial capital over the immediate material conditions of its domestic population, particularly those affected by the property sector's instability.