China’s factory activity improved last month ahead of talks with Washington aimed at ending a tariff dispute.
Surveys released yesterday by an industry group and a business magazine showed improvement, although gains were small.
The China Federation of Logistics & Purchasing said that its purchasing managers’ index rose to 49.8 from August’s 49.5 on a 100-point scale on which numbers below 50 show activity contracting.
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Caixin said its index rose to 51.4 from 50.4.
Demand for Chinese goods has been hurt by weakening domestic and global economic growth as well as US tariff hikes in a fight over trade and technology.
Negotiators are due to meet in Washington next week, but there has been no sign of progress toward ending the dispute, which threatens to tip global economic growth into a recession.
“We don’t expect a meaningful breakthrough. Even if there is a ceasefire, the damage is already partly done because of elevated business uncertainties,” Citigroup economists said in a report.
Weak factory activity is adding to pressure on Chinese leaders to shore up economic growth.
However, they have resisted US demands to roll back plans for state-led development of technology industries that Washington and other trading partners say violate Beijing’s market-opening promises.
The federation described last month’s data as a manufacturing rebound and said “business confidence shows signs of stabilizing,” but forecasters warn that China’s economic activity is likely to decline in the longer term.
A construction boom is winding down and Chinese regulators who want to reduce reliance on debt to propel growth look unlikely to ease lending controls.
Beijing has avoided following the US and Europe in cutting interest rates to spur activity.
A separate index by the federation of service industries declined to 53.8 from August’s 53.7 as construction activity cooled.
“This is unlikely to mark the start of a turnaround,” London-based Capital Economics Ltd said in a report.
“Not only is global demand set to weaken further, but the long-overdue pull-back in property construction is getting under way,” it added.
In related developments, Chinese Vice Premier Liu He (劉鶴), the nation’s top trade negotiator is to lead the 13th round of talks aimed at resolving the trade dispute with the US, Chinese Vice Minister of Commerce Wang Shouwen (王受文) said on Sunday.
Liu would travel to Washington for the negotiations, he said.
Wang did not give exact dates, but said that the talks would be after China’s long National Day holiday, which runs through Saturday.
“The two sides should find a solution through equal dialogue in accordance with the principle of mutual respect, equality and mutual benefit,” Wang told a Beijing news conference with other officials, including Chinese Minister of Commerce Zhong Shan (鍾山).
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