China's factory sector expanded at the weakest pace in seven months in June as flagging global economic growth crippled demand for its manufactured goods both at home and abroad.
The China Federation of Logistics and Purchasing (CFLP) and the National Bureau of Statistics said Sunday that its purchasing managers' index for the manufacturing sector fell to 50.2 in June from 50.4 in May.
A PMI reading above 50 indicates expansion of the sector, while a reading below 50 suggests contraction. The latest score signals that activity remained close to stagnation in June.
The growing uncertainty in Europe, one of China's largest export markets, has clearly affected foreign trade of the Asian economic power house. The spectacular economic growth that China experienced in the past years had been largely driven by external demand.
However, the State Council has vowed to boost domestic demand to shield the economy from economic turmoils abroad. But the cooling economy and the global uncertainty has affected domestic demand too.
Reflecting this, the new orders index fell by 0.6 points to 49.2 in June, the CFLP report showed. The new export orders index fell 2.9 points to 47.5 percent. Both the indices remained at the negative territory, indicating contraction. The production index was down by 0.9 points to 52.
The most recent survey by Markit Economics showed that the factory activity entered an eighth month of contraction in June amid falling export orders.
While acknowledging that the economy is currently facing "increasing downward pressure," China's State Council in May said it will accelerate the process of fine-tuning of its policies to achieve more stable growth.
Amid mounting concerns over intensifying crisis in Europe and slowing domestic growth, the People's Bank of China this month lowered its key interest rates, in the first such move since late 2008. China has lowered the reserve requirement ratio in February and May to boost lending.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.