China’s factory activity contracted at a slower rate in May after a reprieve in the tariff war with the US unclogged trade flows, even as weak domestic demand continues to weigh on the economy. The official manufacturing purchasing managers’ index was 49.

After the talks in Switzerland, the two countries said they would slash tariffs on each other’s goods for at least the next 90 days, with the extra levies the US imposed on China this year falling to ...