China's manufacturing activity activities more than expected in July

Beijing-China's official measuring device for the production activity on Thursday pointed out a poorer than expected contraction with regard to slower economic growth and the ongoing US trade voltages.

The index for the production of shopping managers for July was 49.3 and lacked expectations for 49.7, according to a survey by Reuters.

China's official PMI -PMI has been under the 50 brand brand since April and reflected the contraction and not expansion.

“The PMI is lower due to weather challenges and relocates some arrangements to countries with a lower tariff like Vietnam,” said Cameron Johnson, Senior partner of Shanghai at the consulting company Tidalwave Solutions.

The total export numbers are expected to remain stable for the next quarter, said Johnson and found that a certain production will be shifted to other countries to use lower tariffs until China defines its work interest with the USA

The tensions between the two largest economies in the world that escalated in April, each side of tariffs of more than 100% imposed on imports of goods from the other. The two sides agreed in May to reset most of the additional tasks for 90 days, which gave the effective price for the China exports to the USA to around 43%.

The ceasefire will take place in mid -August. Representatives of the two largest economies in the world ended a meeting in Stockholm this week, without an extension of the agreement that was generally expected.

At the beginning of July, the USA concluded a contract with Vietnam, which imposed a tariff of 40% if the goods were completed elsewhere and only transferred to the Southeast Asian country for sale to the US goods produced in Vietnam

Within the latest PMI in China, sub-index showed that employment, new orders and raw material stocks were also completed in July. The index for jobs ticked up to 48 out of 47.9 in June, during the new orders to 49.4, which fell 50.2 in June compared to the value of 49.4.

The National Bureau of Statistics attributed the PMI decline in the production in July to traditional low season and the factors such as extreme heat and heavy rain in parts of the country.

In one of the recent cases of extreme weather, at least 30 people died on the edge of Beijing this week after the city published the highest red alarm on heavy rain, according to State Media.

In July last year, the official PMI reading of the production was 49.4, with the new orders under the index at 49.3.

In addition to the bad weather, the efforts of Beijing's “anti-involution” to treat overcapacity problems on the economy have an impact, Goldman Sachs analyst said in a note after the PMI data was published.

“The PMI for the production contained a lower power, a lower inventory, but higher price-sub-indices, while the BauPMI decreased at high temperatures and strong rainfall,” the analysts added.

The official non-production of PMI, which measures the activities in service sectors such as tourism, fell to 50.1 in July, from 50.5 in June, as the data publication on Thursday showed.

The decline in both the PMI for production and the services for July corresponds to the expectations of a growth loss in the second year of the year, since GDP was supported in the first six months mainly by companies that increase commands before collective bargaining, said Qin Yong, Chief Economist at the Department of Mitsui Banking Corporation (China). He spoke on Thursday about CNBCs “The China Connection”.

There are hardly any incentives for companies to improve orders again, regardless of the result of trade talks, he said. “Therefore, the tariff on the Chinese economy will be very obvious from August … given the PMI for July, I would say that there are currently some very worrying situations.”

During a high -ranking political office on Wednesday, China's leading managers signaled no plans for a significant new incentive, although the country has increased subsidies to encourage people to have more children.

If the United States and China are able to extend the commercial weapon arrest, this will probably reduce the urge to improve political support for the economy, the analysts of the Bank of America said in a report on the Politburo meeting on Wednesday.

They pointed out that the discussion exceeding the references to interest rate reductions and offered a low indication of additional support for the real estate market and at the same time highlighted the local government's debt risks.

– Anniek Bao and Victoria Yeo from CNBC contributed to this report.