The slowdown in China's economic activity also affected other Asian countries, witnessing a decline in the manufacturing sector in June.
Today's Asian market session was highlighted by the release of manufacturing data from several countries, where China's Caixin manufacturing PMI index eased to 50.5 in June from 50.9 in May.
It was then followed by the release of South Korea's PMI data which contracted to 47.8 last month due to weak demand in Asia and Europe.
For guidance, the number 50 splits the difference between expansion and contraction of an activity. If the reading above 50 indicates expansion, while below 50 the opposite.
Meanwhile, manufacturing activity in Japan fell back to 49.8 from 50.6 recorded previously, and Taiwan's PMI rose slightly but still marked a contraction for the 13th month in a row.
Japan's PMI decline was influenced by a fall in new orders from overseas customers at the fastest pace in four months which indirectly reflected weaker demand from China.
Not only that, but the weakness in China also seems to have an impact on Vietnam and Malaysia which also recorded a contraction in manufacturing activity in June.
This is because, the Asian economy is very dependent on the strength of the Chinese economy which is currently still struggling to recover from the closure of Covid-19.
As the world's second largest economy, China's economic slowdown could also have an impact on the global economy coupled with aggressive policy tightening in the United States and Europe.
In a forecast released in May, the International Monetary Fund (IMF) expected Asia's economy to grow 4.6% this year after a 3.8% increase in 2022, accounting for around 70% of global growth.
However, it cut its growth forecast for Asia next year which is expected to grow 4.4% with warnings of risks to the outlook such as stubborn inflation and an expected slowdown in global demand.
