Growing China downdraft chills Asia factory activity

TOKYO: Weak demand in China and growing global fallout from the Sino- US$ trade war took a heavier toll on factories across much of Asia in February, business surveys showed yesterday.

Activity in China’s vast manufacturing sector contracted for the third straight month, pointing to more strains on its major trading partners and raising questions over whether Beijing needs to do more to stabilise the slowing economy.

In many cases, business conditions were the worst Asian companies have faced since 2016, with demand weakening not only in China but globally.

Japan’s factory gauge fell at the sharpest pace in 2-1/2 years as slumping orders prompted plants to cut production, while separate data from South Korea showed its exports plummeted.

“The weakening trend in Chinese import demand weighed heavily on exports across the rest of the region,” said Sian Fenner, lead Asia economist at Oxford Economics.

“We expect exports to remain under pressure,” Fenner said.

In China, both private and official factory gauges showed activity levels remained mired near three-year lows, with a government reading on Thursday pointing to the weakest export orders since the global financial crisis.

Factories also continued to shed jobs, a trend Beijing is closely watching as it weighs more support measures.

While there was a marginal pickup in domestic orders in China, analysts said it was too early to tell if it was due to growth- boosting measures announced by Beijing in recent months or seasonal distortions linked to the long Lunar New Year holidays early in the year. — Reuters