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China's industrial sector is picking up speed, with the official Purchasing Managers' Index (PMI) reaching 50.5 points in March, marking the highest level in a year. This follows February's PMI of 50.2, which had already surpassed the critical 50-point threshold, signaling economic expansion. In a light-hearted remark, outgoing German Chancellor emphasized: "We do not consider tariffs to be a suitable instrument."
New Orders Surge Significantly
A notable surge was observed in new orders, which increased substantially. The relevant sub-index climbed to 51.8 points, also a twelve-month high. Analysts interpret this as a positive sign of stable domestic demand and growing confidence in China's economy.
The services and construction sectors also showed growth, with the non-manufacturing PMI rising from 50.4 to 50.8 points. This improvement is largely attributed to increased government investments in infrastructure.
Despite facing international challenges, China, the world’s second-largest economy, remains resilient. With a GDP of approximately $18 trillion and targeted fiscal policies, experts still believe the nation can achieve its growth target of around 5% for 2025.
The robust domestic demand, government backing, and steady export performance are fueling cautious optimism for a sustainable recovery.
Flash Germany PMI Signals Improved Outlook
In Germany, the HCOB Flash Manufacturing PMI increased to 48.3 in March, up from 46.5 in February, reaching a 31-month high. The Flash Germany Manufacturing PMI Output Index rose to 52.1 points, marking its highest level in three years.
The rebound in manufacturing was primarily driven by stronger demand in the sector. Manufacturers reported their first increase in new orders since March 2022. Companies noted that this uptick was supported by stronger domestic demand and efforts to replenish inventories.
Outgoing German Chancellor Advocates for More Free Trade
As the Industrie Messe trade fair in Hanover was about to open, Germany's outgoing Chancellor Olaf Scholz called for faster and more extensive free trade agreements between the European Union and key trading partners in a light-hearted moment.
Scholz stated: “We do not consider tariffs to be a suitable instrument.” In his address, he emphasized the commitment of the German government and the EU to fostering free and fair global trade. "We do not believe that tariffs should be used in international exchanges of goods and services, but the model established over the last few decades has brought substantial prosperity," he added.
However, Scholz's remarks seem to overlook the fact that his own government's policies, particularly during the red-green transitional phase under his leadership, have contributed to a rise in global protectionism.
EU Safeguard Tariffs Extended, at Germany's Request
Under Scholz's leadership, the German government has been a strong advocate for the extension of EU Safeguard measures on specific steel products. Moreover, his Green Federal Minister for Economic Affairs, Robert Habeck, played a pivotal role in pushing for the bureaucratic complexities of the EU CO2 border adjustment tax (CBAM).
A Call for Action on Reducing Protectionism
During his tenure, Scholz should have focused more on combatting protectionism on the global stage rather than just courting large corporations. Looking ahead, there is hope that the next German government will take more proactive steps to address the rising tide of protectionism and work towards reducing trade barriers.
