China data suggests trade war hit; tech group reverses Huawei stand

BEIJING --A report Monday on Chinese manufacturing suggested Beijing's trade war with the Trump administration is causing domestic economic damage.

Surveys of manufacturers across Asia for May showed business confidence has been shaken by the conflict over President Donald Trump's demands Beijing change its industrial planning strategy and find other ways to redress its perennially huge trade surpluses.

But in a move perhaps ratcheting back some tensions, the world's largest association of technology professionals said it is lifting a research cooperation restriction it had imposed on employees of Chinese tech giant Huawei.

A private survey, the Caixin manufacturing purchasing managers' index, or PMI, for China held steady at 50.2 in May, just above the 50 level distinguishing between expansion and contraction. But business confidence slipped to its lowest level since the series began in April 2012. The official manufacturing PMI, issued Friday, sank to one of the lowest levels in three years.

China showed no signs of budging over the Trump administration's demands. It issued a report over the weekend saying it would not back down on "major issues of principle." It said Beijing had kept its word through 11 rounds of trade negotiations and accused Washington of backtracking by introducing new tariffs and other conditions beyond what had been agreed to.

Most of Trump's ire over trade has been directed at China, given its lion-sized importance to global manufacturing and its growing technological prowess.

But last week, the president heaped more uncertainty on global financial markets and investors by saying he would impose 5% tariffs on Mexican imports starting June 10 if the Mexicans don't stop the surge of Central American migrants across the southern U.S. border.

That would be a blow to some manufacturers using Mexico as production bases, such as automakers.

Meanwhile, the world's largest grouping of technology professionals, IEEE, reversed itself on a restriction Huawei employees no longer be permitted to peer review or edit articles published in its journals. The restriction had prompted an angry backlash among Chinese members of the 420,000-member organization, with some declaring they would quit.

Huawei has borne the brunt of U.S. castigation in the U.S.-China trade dispute as an alleged national security risk, with the U.S. Commerce Department blacklisting it in mid-May , effectively barring U.S. firm from selling or transferring technology to it.

The IEEE restriction turned out to be an overly cautious response to the blacklisting, the organization said in a statement published on its website Sunday, and was dropped after "requested clarification" from the Commerce Department.

"Our initial, more restrictive approach was motivated solely by our desire to protect our volunteers and our members from legal risk," the statement said.

IEEE, which stands for the Institute of Electrical and Electronics Engineers, was among several leading U.S.-based global technology standards-setting groups that imposed restrictions on Huawei participation in their activities, including the Wi-Fi Alliance and the SD Association.

Huawei, the world's biggest maker of telecom gear and No. 2 smartphone manufacturer, said Monday it had no comment on the announcement.

Zhang Haixia, a nanotechnology scientist at Peking University, said she would rejoin the organization after having resigned from two IEEE boards last week.

"This is a moment that we, the academic community, should be proud of," Zhang wrote in a social media post Monday. "Let's work to make IEEE, an international academic community, great again."

The New Jersey-based IEEE is a leading developer of telecommunications, information technology and power generation standards. It has members in more than 160 countries and puts out about 200 different publications.

On Sunday, Wang Shouwen, China's vice commerce minister and deputy international trade representative, told reporters in Beijing that China would issue details about its own list of "unreliable entities" soon.

Wang said the list, originally announced Friday by a department spokesman, would be aimed at enterprises violating market principles and cutting supplies of components to Chinese businesses for non-commercial reasons. He reiterated suggestions China might limit exports of rare earths, minerals such as lithium used in many products including cell phones, electric vehicles and the batteries that run them.