China's manufacturing, investment hurt by global crises

China's manufacturing activity contracted in December while foreign direct investment fell for the first time in 28 months, data showed on Thursday, as crises in the United States (US) and Europe drag on the economy.

The bleak data came as the commerce ministry warned that export-driven China would face a 'very severe' foreign trade situation in the first quarter of 2012 due to the 'grim and complicated' global economic outlook.

Mounting evidence that China is slowing will ratchet up pressure on Beijing to further loosen monetary and fiscal policies to prevent the world's second biggest economy from suffering a painful hard landing.

The preliminary HSBC purchasing managers' index (PMI) reached 49 in December, slightly up from 47.7 in November - the first contraction in 33 months - as consumers from New York to Paris cut back on holiday spending due to deepening economic woes.