China's factory activity shrunk slightly in December, marking the first time in two years the country's economic barometer did not expand, Reuters reported Monday.

The news outlet reported that the official Purchasing Managers’ Index, which provides an assessment of China’s economy each month, fell to 49.4 in December. A number below 50 indicates factory activity is contracting, while a number above it shows it is growing. 

China's factory activity had not contracted since July 2016, and it marked the lowest figure since February 2016, Reuters reported.

The data indicates the country's economy is facing challenges heading into 2019 amid a temporary truce with the U.S. on tariffs. 

President Trump met early this month with Chinese President Xi Jinping, where the two sides agreed to hold off on further tariff increases amid ongoing trade talks, and the White House said that China had agreed to start purchasing agricultural products.

The two sides have been locked in an escalating trade dispute for months. The U.S. has slapped billions of dollars of duties on Chinese imports, while China has responded with retaliatory penalties on American products.

The exchanges have raised concerns of a trade war between the world's two largest economies, which could adversely affect global markets.

Trump has warned that he is a "Tariff Man" and would be willing to implement additional penalties on Chinese products.

Source: The Hill

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