China's Economic Slowdown: Price War in Auto Industry Sparks Government Concern

China's Economic Slowdown: Weak Manufacturing and Auto Price Wars Raise Concerns BEIJING, June 4, 2025 – China's economy is facing headwinds, with recent data revealing a significant slowdown in the manufacturing sector and a price war erupting in the auto industry. The manufacturing Purchasing Managers' Index (PMI) plummeted to 48.3 in May, marking its lowest point in nearly three years, indicating contracting activity. This comes despite a recent tariff deal with the United States. The auto industry is experiencing intense price competition, with BYD, the country's largest electric vehicle (EV) manufacturer, announcing significant price cuts on 22 of its models. Discounts are reaching up to 34%, leading to a decline in BYD's stock price by 12% since the announcement. "The aggressive price cuts reflect deeper economic issues," explains an industry analyst. "Weak consumer demand and overcapacity are major contributing factors." The Chinese government has expressed concern, urging automakers to end the price war and avoid "dumping goods at prices below cost." This indicates a broader deflationary pressure and cautious household spending across the Chinese economy. The situation highlights the interconnectedness of China's economic challenges, prompting questions about the long-term implications for growth and stability. The government's intervention underscores the seriousness of the situation and its efforts to stabilize the economy.