China manufacturing shrinks in May despite trade war truce

BEIJING: China’s manufacturing activity shrank in May for the second month running, official data showed on Saturday, despite Beijing reaching a temporary ceasefire in a blistering trade war with the United States.

Beijing and Washington agreed this month to pause staggeringly high tariffs, although US President Donald Trump on Friday accused China of breaching the de-escalation deal.

While the two sides reached a temporary truce in mid-May, China recorded a contraction in factory output for the month.

The Purchasing Managers’ Index -- a key measure of industrial output -- came in at 49.5, according to the National Bureau of Statistics (NBS). The reading was up from April’s 49 but fell short of the 50-point mark that separates growth and contraction.

China’s overall economic output in May “continued to expand”, NBS statistician Zhao Qinghe said in a statement.

According to some “US-related enterprises”, foreign trade orders “restarted at an accelerated pace, and import and export conditions improved”, Zhao added.

The non-manufacturing PMI, which measures activity in the services sector, came in at 50.3, down from April’s 50.4.

Chinese leaders are aiming for economic growth this year of five percent, a goal considered ambitious by many economists as the country battles weak domestic consumption.

Although Beijing and Washington agreed this month to pause steep levies for 90 days, the two sides already appeared deadlocked in negotiations.

Trump argued Friday that Beijing had “totally violated” the bilateral deal, without providing details.