China’s factory activity accelerates in March even as US ramps up tariffs

China’s factory activity hit a 12-month high in March, as the country ramped up measures to boost the economy in the face of an escalating tariff war with the United States.

The official manufacturing purchasing managers’ index (PMI) – an indicator of factory activity – rose from 50.2 in February to 50.5 in March, according to data released by the National Bureau of Statistics (NBS) on Monday.

The two months of expansion followed a reading of 49.1 in January, when China celebrated the Lunar New Year holiday. A reading above 50 indicates factory activity is expanding, while one below 50 suggests it is contracting.

The new orders subindex increased 51.8 in March, up from 51.1 the previous month, while the new export orders subindex stood at 49, compared with 48.6 in February.

The data suggests that US tariff hikes have not “had a significant impact on new orders so far” for China’s exporters, said Lynn Song, chief economist for Greater China at Dutch investment bank ING.

But it is possible that some exporters are still front-loading orders out of fear that another round of tariffs may come into effect in April, Song said, meaning that it is still difficult to predict how tariffs will impact China’s factory activity over the coming months.