202.5

China factory gauge lower, adding to economic gloom

Construction workers pass a bag as they stand on scaffolding outside of a shopping mall in Beijing, Thursday, Nov. 29, 2018. Chinese officials announced last month that the country's quarterly growth rate had slowed to the lowest rate since 2009 as consumer spending and housing sales dampened amid a looming trade war with the United States. (AP Photo/Mark Schiefelbein)

BEIJING (AP) — China’s factory activity weakened in November, an industry group reported Friday, adding to pressure on Beijing ahead of talks between Presidents Donald Trump and Xi Jinping over an escalating tariff battle.

The China Federation of Logistics & Purchasing’s monthly purchasing manager’s index fell to its lowest level in more than two years.

Economic activity is “still on a downward trend,” the group said. It blamed “sluggish demand in the domestic market.”

The world’s second-largest economy has cooled since Beijing tightened lending controls in late 2017 to rein in a debt boom. That has added to complications for communist leaders as they try to fend off U.S. pressure to roll back technology policies Washington says violate Beijing’s market-opening obligations.

More broadly, Chinese economic weakness has fueled concern that global activity might be slowing.

Washington and Beijing have raised tariffs on billions of dollars of each other’s goods since July. Chinese exports to the United States have held up despite that, due partly to exporters rushing to fill orders before another tariff hike planned for January. Forecasters say exports are likely to weaken early next year.

Trump and Xi are due to have a working dinner this weekend during a gathering of the Group of 20 major economies in Argentina. Private sector analysts say significant progress toward settling the dispute is unlikely.

Beijing has eased lending controls and injecting money into the economy through higher spending on public works construction. Regulators have moved gradually to avoid reigniting a rise in debt.

The logistics federation’s PMI declined to 50 from October’s 50.2 on a 100-point scale on which numbers above 50 show activity accelerating. That was the lowest level since July 2016.

The measure for new orders declined to 50.4 from October’s 50.8 while that for exports edged up to 47 from 46.9.

The data are “worse than expected,” Irene Pang of ING said in a report, but “we believe that stimulus is on the way.”

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