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China’s manufacturing sector contracted for a seventh straight month in October, keeping alive calls for further stimulus to boost domestic demand, with efforts to ship goods abroad merely exporting price wars.

The PMI fell to 49.0 in October from 49.8 in September, a six-month low, the National Bureau of Statistics' (NBS) survey showed on Friday. It remained below the 50-mark separating growth from contraction, and missed a median forecast of 49.6 in a poll.

“The slowdown in factory activities was partially the result of the eight-day public holiday and “increased complexity in global environment,” quoted from an NBS statement. “Manufacturing firms’ production and market demand both fell,” it added. 

Domestic demand has remained sluggish, with a protracted property slump and soft labour-market conditions eroding households’ spending power. The new orders sub-index came in at 48.8 in October, down from 49.7 a month earlier. 

The non-manufacturing PMI, which tracks activity in the construction and services sectors, inched up to 50.1, supported by renewed momentum in air and rail transportation, as well as stronger performances in accommodation, cultural, and sports-related entertainment industries.

Tensions with the US over trade escalated last month, before a deal was reached by President Donald Trump and his Chinese counterpart Xi Jinping at talks on Thursday in South Korea.

The US would immediately cut the 20% fentanyl-linked tariffs on Chinese goods by half, and in turn, Beijing would resume purchases of American soybeans and other farm products. China also agreed to pause its sweeping rare-earth controls for a year while taking steps to stem the flow of precursor chemicals used in fentanyl production. Both sides agreed to suspend fees for one year on ships that dock at each other’s ports.

Written: Farid Muzaffar

Country
China