China manufacturing activity in January continues to contract

The official manufacturing purchasing managers’ index was at a score of 49.5 points, higher than the 49.4 points in December.

A factory in China Source: Bloomberg

China’s manufacturing sector continued to contract for the second consecutive month in January as the country remains embroiled in a scathing trade war with the United States (US). The performance was however, better than economists’ expectations.

The official manufacturing purchasing managers’ index (PMI) was at a score of 49.5 points, higher than the 49.4 points in December, data from the National Bureau of Statistics showed on Thursday. Economists in a Reuters poll had expected PMI to come in at 49.3 points for the month.

A reading above 50 points indicates an expansion, while a reading below that shows that the sector is in a contractionary mode.

China’s vice premier Liu He will be meeting US president Donald Trump in his visit to Washington on Wednesday and Thursday for the next round of trade talks targeted to quell the trade spat between both countries.

Both parties have a month’s time before their trade truce deadline is due. Once that is over, US tariffs on hundreds of billions in Chinese exports will increase sharply if both parties have not resolved their problems.

China has been broadly affected by the weakened trade as it copes with slowing domestic demand.

China’s growth for last year slipped to the lowest annual rate since the 1990s while its 2018 fourth quarter growth slowed to the weakest since the global financial crisis, as domestic and foreign demand slackened amid the country’s trade conflict with the US.

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