The country’s huge factory sector contracted in December for the first time in two and a half years, according to government data published on Monday. It’s the latest sign of weaker momentum in the world’s second-biggest economy.
The official purchasing managers index slumped to 49.4 during the month, which was lower than what economists polled by Reuters had forecast. A reading below 50 indicates that manufacturing activity contracted compared to the previous month.
“The drivers of China’s slowdown have yet to have their full impact on the economy,” analysts at Moody’s wrote in a research note in December. “This creates a high degree of uncertainty and risk.”
Trade wild card
After imposing heavy new tariffs on goods worth hundreds of billions of dollars, the two sides are now trying to negotiate a deal by the end of February. If they fail, tariffs are set to rise further.
The economic hit from the trade war is expected to become more pronounced in China in the coming months, hurting exports and companies’ profits.