China's manufacturing activity contracted in March at its fastest rate in almost a year, HSBC said today, with its purchasing managers index (PMI) suggesting worsening conditions in the world's second-largest economy.
The preliminary reading for the key Chinese indicator came in at 49.2, the bank said in a statement.
This was below the breakeven point of 50 and the weakest reading since last April, when it hit 48.1, according to the bank's data. It also slumped from a final reading of 50.7 in February.
The index, compiled by information services provider Markit, tracks activity in China's factories and workshops and is regarded as a barometer of the health of the Asian economic giant.
The March PMI is likely to add to fears that Chinese expansion, a key driver of the global economy, may slow further.
The economy expanded by 7.4% last year - the slowest pace in nearly a quarter of a century - and official data earlier this month showed production, consumption and investment growth had all fallen to multi-year lows.
The government has reduced its annual growth target for this year to "approximately 7%", the lowest since a similar goal in 2004.
Underlining official concerns over the economy, the central People's Bank of China cut benchmark deposit and lending interest rates in late February for the second time in three months.
Authorities have so far avoided big incentives to boost growth as they seek to transform the economy from decades of double-digit annual growth to a slower but more sustainable one, a stage that they have branded as the "new normal".
But the Chinese Premier earlier this month signalled that more measures could be taken to encourage expansion, saying that Beijing still has "a host of policy instruments at our disposal".
