China Can factory activity shrink more than expected when exports fall by Reuters

© Reuters. FILE PHOTO: Employee works on the production line at a factory for automaker manufacturer Power Xinchen in Mianyang

BEIJING (Reuters) – China's factory activity in May fell into a deeper contraction than markets had expected, pushing pressure on Beijing to roll out more stimulus for to support an economy that is hit hard by a bruising war with the United States.

Friday's weak production readings, which follow a fresh amount of soft data across retail, export and construction sectors, can cause concerns about the risk of a global recession and push more central banks to adopt a accommodating monetary policy.

The official purchasing manager index (PMI) fell to 49.4 in May from 50.1[ads1] in April, showing data from the statistics agency. Analysts surveyed by Reuters had predicted that PMI would be down at 49.9, below the 50-point mark, the extension from contractions differs monthly.

Factory production expanded more slowly as new orders fell for the first time in four months. Export orders increased their decline in the 12th straight month, with the sub-index declining significantly to 46.5 from April 49.2, suggesting a further deterioration in global demand.

"Export orders fell back particularly sharply, suggesting that Trump's latest tariff increase may already undermine foreign demand," said Julian Evans-Pritchard, senior economics in China at Capital Economics.

While China's exporters feel squeezed, Friday's data that import orders were also contracted at a faster pace, reflecting the softening needs at home despite the joy of growth-supporting measures that were rolled out earlier this year.

Trade tensions between Washington and Beijing escalated sharply earlier this month after the Trump administration accused China of "declining" their earlier promises to make structural changes to its economic practices.

Washington later imposed surcharges of up to 25% on $ 200 billion of Chinese goods, and asked Beijing to receive. 19659004] Tariff settlement has already taken a toll on global growth, trade and business investment. e tensions between the financial giants, the Trump administration replied, Blackjack Huawei Technologies Co., Ltd., the world's second largest smartphone salesman, a blow that has crumpled through global supply chains and battery technical stocks.

Both sides seemed to dig in as President Donald Trump threatens to increase taxes on all China imports while Beijing strengthened his criticism of Washington, saying that provocative trade disputes are "naked economic terrorism".

China's exports unexpectedly fell in April on a sharp decline in shipments to the United States, while industrial production and retail also showed surprisingly weak growth last month. Data this week showed profits for industrial companies also entered into in April.

While most analysts believe more stimulus is needed to brush the economy as external uncertainty cloud outlook, a senior central bank officer said Thursday a relatively slower rate of monetary expansion would be enough to sustain economic activity.

Despite the weakness of the industrial sector, another survey by the statistical agency on Friday showed that growth in China's service industry remains in a solid expansion area. The official non-producing Purchase Manager Index (PMI) held at 54.3 in May, unchanged from April.

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