China factory activity falls contracts in May amid dispute

BEIJING – China’s factory activity fell into contraction territory in May amid an ongoing trade dispute with the U.S. that has seen higher tariffs slapped on Chinese exports.

The National Bureau of Statistics and an industry group, the China Federation of Logistics & Purchasing, said Friday that the composite purchasing managers’ index of China dropped to 49.4 in May, down from 50.1 in April.

That suggests that manufacturing activity for the month shrank since any reading below 50 shows that activity is contracting.

In an analysis, ING Greater China economist Iris Pang said: “We believe that the contraction in new orders means domestic manufacturing activity has been affected by both the trade war and the technology war.”