China’s manufacturing sector expanded at its lowest pace in over two years. The economy has been hardly hit by the ongoing trade war with the United States. The official Manufacturing Purchasing Managers Index (PMI) which points to business conditions in the country dipped to 50.2 from 50.8 in September. A reading above 50 points toward expansion while below it means contraction. The reading was under the forecast 50.6 in a Reuters’ poll.

China’s statistics bureau attributed the slump in October’s manufacturing activity to the impact of a week-long national holiday and the challenging external environment. Non-Manufacturing PMI, mirroring the activities in the construction and services sector also dipped from 54.9 in September to 53.9 in October.

There was a slump in new export orders for the fifth successive month as it fell to 46.9 from 48.0 in September with the pace of this decline estimated to be the fastest in nearly a year. Imports contracted for the fourth successive month.

Raymond Yeung, chief economist for China at ANZ believes that the PMI numbers confirm a broad-based decline in economic activity. He added that conditions for the private sector is “much worse” than headline data suggest.

A possible contraction in manufacturing could be expected in the coming months as the tariff war is heating up more with time. This data came out after tariffs imposed by the United States on Sep 24 took full effect for at least a month. Trump Administration levied tariffs at 10% on $200 billion worth of Chinese imports on the said date. Exporters are likely to feel further pain when these rates are hiked to 25% beginning next year.

Chinese Yuan fell to a decade-low on Oct 30 triggered by a slowdown in economy and news that President Trump is likely to impose tariffs on a full range of Chinese imports if desired concessions are not received from President Li in the ongoing trade talks. President Trump and Li are supposed to meet in G-20 Summit in Argentina later this month.