China’s factory activity unexpectedly declined in May
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The news: China’s factory activity contracted in May, in a surprise reversal in the country's manufacturing recovery after two months of gains, Bloomberg reported.
The numbers: The official manufacturing purchasing manager index fell to 49.5 in May, China's National Bureau of Statistics (NBS) said.
The reading of under 50 — which points to a contraction in activity — compares with 50.4 in April, and a forecast of 50.5 in Bloomberg’s economist survey.
The latest data threatens China’s GDP growth target of around 5% for 2024, with the country’s export-oriented industries expected to be critical for economic growth.
The context: China's NBS pointed to "a high base of comparison led by previous fast expansion in the industry" and "insufficient effective demand" as reasons for the slowdown.
Chinese manufacturers also face rising tensions with trade partners, as the US and European Union accuse China of building excess capacity in its industries through state subsidies.
New trade barriers — including the recently imposed 100% tariff on Chinese electric cars by US President Joe Biden — pose an additional challenge to the country's growth ambitions.
The source: Bloomberg
