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CHINA-ECONOMY-MANUFACTURING
China factory activity contracts again amid trade row
BEIJING, July 31, 2019 (BSS/AFP) – China’s manufacturing activity
contracted for a third month in a row in July, official data showed
Wednesday, amid a bruising trade war with the United States and slowing
global demand.
Washington and Beijing have so far hit each other with punitive tariffs
covering more than $360 billion in two-way trade, damaging manufacturers in
both countries.
The Purchasing Managers’ Index (PMI), a gauge of Chinese factory
conditions, came in at 49.7 for the month, slightly up from June’s figure of
49.4, according to the National Bureau of Statistics (NBS).
The reading falls below the 50.0 mark separating expansion from
contraction. Economists surveyed by Bloomberg had predicted a reading of
49.6.
“There are many positive changes going on in the manufacturing sector,”
said NBS analyst Zhao Qinghe in a statement, pointing to industries like
tobacco, paper and IT equipment where activity expanded.
The new export and import orders sub-index rose from June but also
remained in contraction territory.
Beijing has enacted massive tax cuts and tried to better funnel financing
to small and medium sized companies in a bid to combat the slowdown.
The policies have “further reduced the burden on enterprises and played an
important role in stabilising corporate confidence,” Zhao said.
But while momentum picked up at large scale manufacturers during the
month, it retreated at small- and medium-sized businesses.
Chinese and US trade negotiators met in Shanghai on Wednesday in a bid to
bring an end to the year-long trade war.
The data “still appear consistent with a renewed slowdown in year-on-year
growth in industrial output and broader economic activity,” said Julian
Evans-Pritchard of Capital Economics in a note.
“With the headwinds to growth from US tariffs, cooling global demand and
tighter property controls likely to intensify, we continue to anticipate
further monetary easing in the coming months,” he added.
BSS/AFP/HR/0945