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China reports weakest factory growth in over two years

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BEIJING: Growth in China’s vast manufacturing sector stalled for the first time in over two years in November as new orders slowed, piling pressure on Beijing ahead of crucial trade talks between Presidents Xi Jinping and Donald Trump this weekend.


If the high-stakes negotiations fail, Trump is widely expected to proceed with a sharp tariff hike on Chinese goods in January, which would further strain China’s slowing economy and heighten risks to global growth. Friday’s downbeat factory activity reading suggested a flurry of stimulus measures by Beijing in recent months has yet to be felt, adding to views that business conditions in China will likely get worse before they get better.


The official Purchasing Managers’ Index (PMI), released by the National Bureau of Statistics (NBS), fell to 50 in November, missing market expectations and down from 50.2 in October. It was the weakest reading in 28 months.


Analysts surveyed by Reuters had forecast little change from October’s already marginal growth levels. The 50-point mark is considered neutral territory, indicating no expansion in activity or contraction on a monthly basis.


Even if a trade ceasefire is reached, the latest data suggested China’s economy will continue to weaken in coming months, with new orders faltering both at home and abroad.


The new orders sub-index — an indicator of future activity — declined to 50.4 from 50.8, with export orders shrinking for a sixth straight month.


A sister survey released by the NBS on Friday showed growth in China’s service sector moderated in November, but remained at solid levels. That is likely to cushion China’s slowdown somewhat, as services account for more than half of the economy.


The official non-manufacturing Purchasing Managers’ Index (PMI) dipped to 53.4 from 53.9 the previous month, with overall business confidence falling to 54.2 from 56.4 in October. — Reuters


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