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China August factory activity contracts amid US tarrifs

China’s manufacturing activity contracted for a fourth month in a row in August, official data showed Saturday, as the US stepped up tariff pressure and domestic demand slowed.

On Sunday, the US is expected to hit billions of dollars worth of Chinese products with 15 percent duties, in a sharp escalation of a bruising trade war.

It is the first of two rounds of new tariffs. 

So far, Washington has imposed tariffs on some $250 billion worth of Chinese goods, while Beijing has retaliated with tariffs on $110 billion worth of US products including soybeans and apples.

The Purchasing Managers’ Index (PMI), a gauge of Chinese factory conditions, dipped to 49.5 for the month, slightly down from July’s figure of 49.7, according to the National Bureau of Statistics (NBS).

The reading falls below the 50.0 mark separating expansion from contraction. Economists surveyed by Bloomberg had predicted a reading of 49.6.

The new export and import orders sub-index was down from July and remained in contraction territory.

Despite sluggish global demand “large enterprises have continued to expand, and small businesses have rebounded,” said NBS analyst Zhao Qinghe in a statement, pointing to sectors such as pharmaceuticals and textiles where activity expanded. – AFP

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