China's annual passenger car sales fell last year for the first time in more than 20 years as the trade war with the US rocked consumer confidence and Beijing reined in car financing channels.

Passenger car sales fell to 22.4 million vehicles in 2018, down 5.8 per cent from a year earlier, data from the China Passenger Car Association (CPCA) showed on Wednesday.

In December sales plummeted 19.2 per cent from a year earlier, the CPCA said.

The slumping market has hit China's manufacturing sector, which contracted last month for the first time in more than two years, according to official data.

Beijing's bruising trade war with Washington comes as it grapples with a slowing domestic economy — growth is expected to have eased to around 6.5 per cent in 2018, down from 6.9 per cent in 2017.

The gloomy export picture has reinforced the need for Beijing to rely on its legion of consumers to grow its economy.

But the government's campaign against debt was in full force last year, cutting into parts of the shadow finance industry like peer-to-peer lending which financed car purchases for some consumers.

Declining car sales may be last year's phenomenon, said CPCA secretary general Cui Dongshu.

"I hope that's the case," he said.

Officials are taking steps to reignite consumer spending.

Policies will be rolled out to push auto and home appliance consumption, an official at the state planner told official news agency Xinhua this week.

Still some officials have indicated car sales may have little room for growth.

"The period of rapid growth in production and sales of cars is over and low growth speed could become the norm in the automotive market," Xin Guobin, vice minister of industry and information technology said last year, according to China News.