China factory growth in June as trade tensions rise

BEIJING (Reuters) – Growth in China's manufacturing sector slowed down in June after a better-than-expected performance in May, official data showed, as escalating trade tensions with the United States fuel concerns about a slowdown in the world's second-biggest economy.

China's economy has already felt the pinch of a multi-year crackdown on riskier lending that has driven up corporate borrowing costs.

The official Purchasing Managers' Index (PMI), published in the United States on December 31, 2009 at 23rd straight month.

The findings are in line with recent data growth, growth, and growth in China's economy as a result of the United States.

Significantly, the June new export orders index contracted for the first time since February, dropping to 49.8 from 51.2 in May.

A sub-index production fell to 53.6 in June from 54.1 in May, while new orders sub-index declined to 53.2 from 53.8.

The PMI for large-sized firms fell to 52.9 in June from 53.1 in May, the index for medium-sized firms dipped to 49.9 from 51.0 while that for small firms rose to 49.8 from 49.6.

PRESSURES ON DEMAND

"Domestic demand is weakening and exerting pressures between escalating trade frictions between China and the United States," said Wen Bin, senior economist at Minsheng Bank in Beijing.

Wen said he expected the central bank to continue to lower banks' reserve requirement ratios (RRR) in the coming months to help ward off a sharper economic slowdown.

The central bank said on June 24 it would cut the RRR by 50 basis points for some banks to accelerate the pace of debt-for-equity swaps and spur lending to smaller firms.

After May's official factory PMI touched an eight-month high, China's economy is finally slowing.

Credit growth has slowed down this year as the government is growing, and the tighter liquidity environment appears to be impacting growth.

On July 16, the government is due to release data on second-quarter growth in gross domestic prod- uct (GDP) and other key indicators.

Analyst at ANZ forecasts second-quarter growth of 6.7 percent, from 6.8 percent in the first quarter.

In May, industrial output, retail sales and fixed asset investment, and local governments scaled back building projects amid scrutiny from Beijing over their borrowings.

While economics is likely to increase dramatically, the trade dispute with the US is adding to the uncertainty of China's economy will react.

As U.S. President Donald Trump has ratcheted up the pressure on China with threats of new tariffs and investment restrictions, China's stock markets and currency.

JUNE MARKET LOSSES

After a sustained sell-off, China's yuan and stock markets were recovered some time ago, but investors were still struggling with Sino-U.S. trade row attacked to rattle the country.

The United States has been taxed at $ 450 trillion with Chinese imports, with the first $ 34 trillion portion set to go into effect on July 6.

with May shipments rising 12.6 percent in dollar terms.

But the contraction in new export orders in June could point tougher times ahead for exports.

A sister survey showed growth in China's service sector (PMI) rising to 55.0 from 54.9 the previous month.

A sub-reading for construction activity, a major driver of growth in 2017, stood at 60.7 in June, up from 60.1 in May.

Chinese policymakers are counting on growth in services and consumption to rebalance their economic growth model from its heavy reliance on investment and exports. The services of the Chinese economy are more important to the economy.

The PMI composite covering both manufacturing and service activity slipped to 54.4 in June, from May's 54.6.