China’s Factory Activity Contracts for The First Time in 19 Months

© Reuters. © Reuters. – China’s factory activity shrank for the first time in 19 months in December, a private survey showed on Wednesday.

The fell to 49.7 from 50.2, marking the first contraction since May 2017. That compared to the consensus of a marginal dip from November to 50.1.

A reading below 50 signals contraction.

The reading confirmed a trend seen in the official PMI that was reported on Monday, which showed a drop to 49.4 in December.

The Caixin/Markit survey focuses mostly on smaller businesses, filling a niche that isn’t covered by the official data.

The ongoing trade war between the U.S. and China continued to affect demand across Asia’s manufacturing hubs, analysts said.

“External demand remained subdued due to the trade frictions between China and the U.S., while domestic demand weakened more notably,” said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group.

“It is looking increasingly likely that the Chinese economy may come under greater downward pressure,” said Zhong.

While President Donald Trump signalled that negotiations with China are making progress, an article published by China’s state-owned newspaper “The People’s Daily” said on Wednesday that Beijing “has not given in, is not giving in, and will never give in” in matters related to core national interests.

“Regardless of the development of Sino-U.S. relations, China’s strategic choice to deepen reform and opening is unswerving, and we are committed to doing our own thing”, the article added.

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