China’s January factory growth misses expectations ahead of U.S. tariffs, Caixin PMI shows

China’s factory activity slowed in January as the country gears up for fresh U.S. tariffs this month, a private-sector survey showed Monday.

The Caixin/S&P Global manufacturing purchasing manager’s index came in at 50.1 in January, missing Reuters poll forecast of 50.5.

Manufacturing PMI stayed above the 50 level that separates expansion from contraction for a fourth straight month. It nudged down from 50.5 in December, 51.5 in November and 50.3 in October.

The private survey reading follows the official PMI data in January that showed activity unexpectedly contracted to 49.1, after expanding for three straight months, reinforcing calls for more stimulus to spur growth. Reuters had forecast PMI to come in at 50.1.

U.S. President Donald Trump on Saturday signed executive orders to impose 25% tariffs on Mexican and most Canadian imports and 10% on Chinese goods, starting Tuesday.

On his first day in office last month, Trump ordered his administration to investigate Beijing’s compliance with a trade deal struck during his first presidency,.

The tariffs came as China’s economy has been battling a slowdown. While the country achieved Beijing’s full-year growth target of 5.0% last year, it still struggles to boost growth amid tepid domestic demand and a prolonged real estate downturn, leaving exports as a key driver of growth.

Since Beijing introduced a flurry of policy support measures late last year, some sectors have seen economic activity stabilize, but markets are monitoring Beijing’s next policy steps as trade tensions with the U.S. will likely intensify.

Chinese authorities have pledged to make boosting domestic consumption a top priority and expanded their consumer goods trade-in program this year.

China’s Commerce Ministry said it would challenge Trump’s tariff decision at the World Trade Organization, condemning the sweeping tariffs as a “serious violation of international trade rules.” Beijing will “take relevant countermeasures to firmly safeguard its own rights and interests,” the statement said, but stopped short of announcing specific plans for tariffs.