CHINA’S manufacturing sector is expected to have contracted for the first time in more than two years in December, reinforcing a deteriorating economic outlook and the need for more policy support to weather rising external and domestic pressures.

China’s official manufacturing Purchasing Manager’s Index (PMI) for December is forecast to slip to 49.9, according to the median forecast of 27 economists in a poll, below the critical 50 level that separates growth from contraction.

A contraction in December, which will be the first since July 2016, would signal a continued loss of economic momentum and raises the risks to both China and the global economy, especially if a Sino-U.S. trade dispute drags on.

Already, there are signs the trade frictions between the economic giants are rippling through global supply chains. The fear is that the effects could become more pronounced next year in a blow to world trade and investment.

Chinese authorities are expected to roll out more supportive measures on top of a range of policy initiatives this year. A prolonged downturn in the factory sector, key for jobs and the overall health of the economy, would likely draw further steps to juice up domestic demand.

“Such measures — mostly medium to long-term policies —are likely to put a floor under the slowing economy in the second half of next year at the earliest,” said Nie Wen, economist at Hwabao Trust in Shanghai, noting that with global demand slackening, the policy effects could be further delayed.

There is also uncertainty whether China and the United States can bridge their differences during a temporary ceasefire in their trade war.

At the beginning of this month, China and the United States agreed to a ceasefire. (SD-Agencies)