China's April PMI seen easing back slightly

Slowdown in export orders points to trade risks

Growth in China's vast manufacturing sector eased only slightly in April in a sign of broad economic resilience, though slowing export orders pointed to risks to the outlook amid a simmering Sino-U.S. trade row.

China is in the third year of a broad effort to curb a dangerous build-up of debt across the economy, and so far policymakers appear to have successfully steered through the challenge of tempering financial risks without imperiling growth.

The official Purchasing Managers' Index (PMI) fell to 51.4 in April, from 51.5 in March, the National Bureau of Statistics (NBS) said on Monday, but remained well above the 50-point mark that separates growth from contraction on a monthly basis. It marked the 21st straight month of expanding business conditions in China.

But the slightly softer reading, especially the slower export orders, adds to concerns about an expected loss of momentum in the world's second-largest economy, as policymakers navigate debt risks and a heated trade row with the US.

"The support to the economy from the easing of pollution controls should now largely have run its course," said Chang Liu, China economist at Capital Economics in a note to clients. "Slower growth is likely in the months ahead as the drags on economic activity from weaker credit growth and the cooling property market intensify."

Signs of softness in the trade sector were evident in the latest PMI, with the export orders sub-index falling to 50.7 from 51.3. Total new orders also eased slightly, though the sub-index for output remained steady.

There are worries that the tech sector, which burnished China's solid exports growth in 2017, could come under pressure as the rising tensions between China and the US threaten to hit billions of dollars in cross-border trade.

The hi-tech manufacturing sub-index, however, pushed up this month to 53.8, compared with 53.2 in March.

"Hi-tech manufacturing continues to lead," said Zhao Qinghe, a senior statistician with the NBS.

Economists expect China's economic growth to ease to 6.5 percent this year, in line with the official target but below a forecast-beating 6.9 percent in 2017, with a regulatory crackdown on the country's finance sector and the growing trade dispute with the US seen as key risks, a Reuters poll showed.

Speculation is also growing that China is considering loosening its monetary policy, as the threat of an all-out trade war with the US clouds the outlook for key growth drivers of both China's "old economy" heavy industries and "new economy" tech firms.

Nomura analysts saw no immediate need to boost stimulus.

"The still-solid PMI suggests to us that there is no urgent need to move toward a more expansionary fiscal or monetary policy, and that the focus should remain on a gradual and orderly deleveraging to reduce financial risks," the analysts wrote in a note to clients.