In February, factory activity in China reached its lowest level in three years, as export orders fell at the fastest pace since the global financial crisis, highlighting a worsening of exports. cracks in an economy facing weak demand both domestically and abroad.
The gloomy results are likely to reinforce the view that the world's second-largest economy is still losing steam, after last year's growth has been brought down to its lowest level in 30 years.
Although the government is increasingly encouraging activity, fear that China may be further slowed if Sino-US trade talks fail to ease some of the pressure increases.
The official index of purchasing managers (PMI) fell for the third consecutive month, falling from 49.5 in January to 49.2 in February, according to data released Thursday by the National Bureau of Statistics ( NBS). The 50 mark marks the distinction between growth and contraction on a monthly basis.
Analysts polled by Reuters predicted the tonnage would remain unchanged from 49.5 in January.
"Unless the trade war really turns into a prolonged truce, the trend of weakening may not end quickly," said Iris Pang, economist for Greater China at ING, in a note. "As such, we expect a decline in the March PMI."
Manufacturing output contracted in February for the first time since January 2009, in the depths of the global crisis. An analysis of the survey results showed that the production subindex dropped to 49.5 from 50.9 the previous month.
Manufacturers also continued to cut jobs, a trend that Beijing is watching closely as its support measures multiply.
New export orders fell for a ninth consecutive month, and at a faster pace, due to weak global demand. The sub-index fell to 45.2, the lowest level since February 2009, after 46.9 in January.
However, total new orders – an indicator of future activity – fell slightly into expansionary territory, suggesting some improvement in domestic demand. The sub-index rose from 49.6 in January to 50.6 in January, after two months of decline.
However, Chinese observers generally recommend to interpret the country's economic data early in the year because of the Lunar New Year holiday schedule, which will last a week.
Many companies are cutting back or closing for long periods around the holidays, which began on February 4 this year. But workers, business owners and labor activists told Reuters that businesses had closed earlier than usual at the time of the trade war, with some of them likely to to close definitively.
The Ford Motor Co joint venture in China has quietly started firing thousands of its workers because of weak auto sales in the world's second-largest economy, the New York Times reported on Wednesday.
The record lending by Chinese banks in January and the sharp rebound in its stock markets eased the gloomy downturn.
But analysts say it will take months to see whether the strong credit drive will translate into improved business activity, assuming companies borrow for further expansion or investment, and not just to refinance existing debt. .
Some economists estimate that growth could even fall below 6% in the first half, up from 6.4% in the fourth quarter, before stabilizing later in the year, with a series of support measures starting to take effect in 2018 and 2019.
Uncertainty also weighs on the current situation in China and the United States. trade negotiations.
President Donald Trump said Monday that he could soon sign an agreement with Chinese President Xi Jinping to end the country's trade war, if both sides manage to overcome their differences.
But the chief US negotiator said on Wednesday that it was too early to predict the outcome.
US problems with China are "too serious" to be resolved with Beijing's promise to buy more US goods and any deal between the two countries must include a way to make sure that the commitments are respected, said US Trade Representative Robert Lighthizer.
Growth in China's services sector also slowed in February after rebounding for two straight months, another sign of tension as consumers become more cautious about spending.