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RIYADH: China’s factory activity contracted unexpectedly in July after bouncing back from COVID-19 lockdowns the month before, as fresh virus flare-ups and a darkening global outlook weighed on demand, a survey showed on Sunday.

The official manufacturing Purchasing Managers’ Index fell to 49.0 in July from 50.2 in June, the National Bureau of Statistics said, below the 50-point mark that separates contraction from growth and the lowest in three months.

Analysts polled by Reuters had expected a reading of 50.4.

“The level of economic prosperity in China has fallen, the foundation for recovery still needs consolidation,” NBS senior statistician Zhao Qinghe said in a statement on the NBS website.

Continued contraction in the energy-intensive industries, such as petrol, coking coal and ferrous metals, contributed most to pulling down the July manufacturing PMI, he said.

British businesses turning away from China: industry group

British businesses are cutting ties with China due to concerns about political tensions, a shift that is likely to stoke inflationary pressures, the head of the Confederation of British Industry said in an interview published on Saturday.

“Every company that I speak to at the moment is engaged in rethinking their supply chains … because they anticipate that our politicians will inevitably accelerate toward a decoupled world from China,” CBI director-general Tony Danker was quoted as telling the Financial Times newspaper.

China was Britain’s biggest source of imported goods in 2021, accounting for 13 percent of the total, while it was the sixth largest destination for goods exports, according to Britain’s official trade statistics.

However, British security concerns have risen in recent years, fueled by disagreements with China over Hong Kong and other issues. Last week, the head of Britain’s foreign intelligence service, Richard Moore, said China was now his top priority, ahead of counter-terrorism work.

Britain has also increasingly blocked Chinese takeovers of companies on national security grounds. 

(With input from Reuters)