China Caixin Manufacturing PMI Boosted by Export Orders; Hang Seng Index Reacts

China’s Manufacturing Gains Momentum—Was Front-Loading Behind the March Jump?

China’s economy took center stage on Tuesday, April 1, as Trump’s Liberation Day tariffs loomed. While Beijing has remained relatively silent on US tariffs, the risks for a full-blown US-China trade war have intensified. The PMI data revealed the potential front-running of US tariffs, which could face US scrutiny.

China’s Caixin Manufacturing PMI rose from 50.8 in February to a four-month high of 51.2 in March. While rising further away from the neutral 50 level, the March Survey revealed some key trends:

• Production growth accelerated as manufacturers responded to rising new orders.
• New export orders surged at the fastest pace in almost a year.
• Manufacturers increased staffing levels for the first time since August 2023 to meet rising demand.
• Average input prices declined for the first time in six months.
• Lower input prices allowed firms to reduce selling prices.
• Increased competition weighed on selling prices in March 2025.
• Business sentiment remained positive but fell below the series average as firms because of uncertainties stemming from additional trade barriers.

The March PMI report highlighted front-loading across the manufacturing sector as US tariffs loomed. Notably, upward trends in new export orders, production, and employment levels could be temporary as US President Trump imposes higher tariffs. A potential slump in manufacturing sector output underscored the need for Beijing to boost domestic demand and consumption.

Expert Views on China’s Manufacturing Sector

Dr. Wang Zhe, Senior Economist at Caixin Insight Group, commented on the March survey:

“The major macroeconomic indicators in the first two months were in line with or slightly exceeded market expectations. The economy had a stable start to the year, with signs of further recovery and improvement. However, the job market remained relatively sluggish, and deflationary pressures persisted, due to insufficient effective demand at home and market participants’ weak optimism”

Looking ahead, Dr. Zhe added:

“In 2025, as the external environment becomes increasingly severe and complex, China’s macroeconomic policies need to be more proactive and decisive, with measures implemented as soon as possible to support a sustained economic recovery.”

The Market Reaction to the Caixin Manufacturing PMI

Markets reacted swiftly to the Caixin Manufacturing PMI data, with equities and forex markets reflecting shifting sentiment.

Before the PMI data, the Hang Seng Index briefly climbed to a session high of 23,373. However, in response to the March PMI report, the Index rose to a high of 23,348 before falling to a low of 23,207. On Tuesday, April 1, the Index was up 0.79% to 23,301 for the morning session.

In the forex market, the AUD/USD had a mixed reaction to the PMI data, falling to a low of $0.62369 before rising to a post-report high of $0.62460. On Tuesday, the AUD/USD was down 0.02% to $0.62454.

Aussie dollar sensitivity to China’s economic data has intensified amid demand concerns. Australia has a trade-to-GDP ratio exceeding 50%, with China accounting for one-third of its exports. Australia’s reliance on trade exposes the Aussie dollar to tariff developments and the potential effects on demand.

What’s Next? US Tariffs Developments in Focus Ahead of Liberation Day

On Tuesday, April 1, investors should track tariff developments. A President Trump U-turn on auto tariffs and reciprocal tariffs could reboot market risk sentiment. However, an escalation in the global trade war may trigger another flight to safety.

Discover strategies to navigate this week’s market trends here.