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China's manufacturing shrinks, concerns showed over recovery.


China's factory activity significantly declined in April, according to an official survey on Sunday, signaling against the Chinese policymakers and depicting the challenges in sustaining momentum in the economy's recovery. The government statistics and an official industry group stated that the monthly purchasing managers' index declined to 49.2 from March 51.9 on a 100-point scale, where below 50 indicates activity contracting.

Measures of production, new orders, and employment dropped from the previous month, the National Bureau of Statistics and the China Federation and Logistics & Purchasing said. But they said the index for production remained above 50, meaning there was still an expansion.

China's economic growth accelerated in Quarter 1 (Q1) of this year after the abrupt end of anti–virus controls. Authorities cautioned that the country would likely face impex pressures amid an uncertain global economic outlook and warned of inadequate domestic market demand in the world's No. 2 economy. 


The Senior Statistician Zhao Qinghe said, "The decline in the manufacturing purchasing managers' index was partly caused by inadequate market demand and the relatively high base figure recorded in Quarter 1 when the recovery was fast.

The government earlier said authorities would implement various policies to “stabilize growth” and stimulate domestic demand, as well as help support the development of emerging industries. 


Official data also showed the index measuring non – manufacturing commercial activities edged down to 56.4 from 58.2 in March. The composite PMI dropped to 54.4 from 57 last month Chinese government has set a target of 5%, a conservative target that will only be met if the Gross Domestic Product (GDP) grows faster in the coming months.

Rising COVID-19 cases in tens of cities over the summer also disrupted the manufacturing and the services sectors, though the latter is starting to bounce back as the outbreaks receded. A sub-index for factory output contracted in September for the first time since February last year, dragged down by a pullback in high-energy consuming industries, such as plants that process metals and oil products. The gauge stood at 49.6 versus 50.1 a month earlier.


"In September, due to factors such as low volumes of business at high energy-consuming industries, the manufacturing PMI fell below the critical point," said Zhao Qinghe, a senior NBS statistician, in an accompanying statement. "(Chinese) economic growth in Q4 will likely slow further without a change of government policies, and the pace of slowdown may pick up," said Zhiwei Zhang, Shenzhen-based chief economist at Pinpoint Asset Management, after the PMI data was released.


"The big question is whether the government's monetary and fiscal policies will become more supportive now or if the government will wait till the year-end to change the policies." A sub-index for raw material costs rose to 63.5 in September from 61.3 a month earlier, while a gauge of new orders came in at 49.3 compared with 49.6 in August, shrinking for the second straight month.




On a more optimistic note, the official non-manufacturing PMI in September was at 53.2, bouncing back from 47.5 in August, data from the NBS showed, as COVID-19 outbreaks receded after rising during the summer months. Last month, COVID-19-related restrictions drove services sector activity into sharp contraction for the first time since the height of the pandemic last year.


The official September composite PMI, which includes both manufacturing and services activity, stood at 51.7 versus 48.9 in August. China’s Communist party effectively acknowledged last week that the economy would not hit its official 5.5% growth target this year. After a high-level leaders’ meeting, state media reported that China would try hard to achieve the best financial results this year.


Purchasing managers’ indexes released Sunday showed an unexpected decline in factory activity in April, weighed down by weaker global demand for Chinese exports. Chinese consumers, though, continued to spend on travel and shopping.

The data suggest China’s recovery remains lopsided, with the production side of the economy lagging the rebound in consumption. That underscores Chinese leaders’ cautious growth outlook at a meeting Friday and the need for more policy stimulus. 

The composite PMI figures suggest “China’s post-Covid recovery has somewhat lost steam and calls for continued policy support,” said Zhou Hao, chief economist at Guotai Junan International Holdings Ltd.

A non-manufacturing index of activity in the services and construction sectors slid to 56.4 from 58.2 in March, suggesting substantial expansion in those industries as consumer spending and government expenditure rose.

 Holiday spending figures on the first five-day Labour Day break underscored the recovery. Some 19.7 million railway trips were made across the country on Saturday, the highest on record for a single day, local media The Paper reported, citing official data. Traffic is expected to be 20% higher than in 2019, before the pandemic struck. 

Shoppers were out in force on Saturday, too, with significant retail and catering companies seeing sales jump 21% from a year ago, according to Ministry of Commerce data cited by state broadcaster CCTV. 

Edited by - 

Whitney Edna Ibe 







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