Sta­ble growth re­mains the way ahead Trend pos­i­tive de­spite mod­er­ate weak­en­ing in man­u­fac­tur­ing sec­tor

China Daily (Hong Kong) - - BUSINESS - By XIN ZHIMING xinzhim­ing@ chi­

China’s man­u­fac­tur­ing sec­tor ac­tiv­ity, mea­sured by a ma­jor of­fi­cial in­dex, weak­ened mod­er­ately in July, but econ­o­mists said the trend of sta­ble growth in the world’s sec­ond-largest econ­omy will re­main.

The Pur­chas­ing Man­agers’ In­dex, re­leased on Mon­day by the Na­tional Bu­reau of Statis­tics, came in at 51.4 for July, down from 51.7 in June, but it re­mained well above the 50-point mark that sep­a­rates growth from con­trac­tion.

Zhao Qinghe, a se­nior of­fi­cial at the NBS, at­trib­uted the fall in the in­dex to re­cent ex­treme weather in many parts of the coun­try, which dis­rupted nor­mal in­dus­trial ac­tiv­i­ties, and sea­sonal equip­ment re­pairs.

“Although the in­dex fell by 0.3 per­cent­age points com­pared with the pre­vi­ous month, it is roughly at the same level as the av­er­age of the in­dexes in the first six months,” he said in a state­ment pub­lished on the bu­reau’s web­site. “It has re­mained above 51 since the start of this year, (in­di­cat­ing that) the over­all trend is sta­ble.”

The fall in the in­dex in July does not nec­es­sar­ily re­flect a weak­en­ing growth trend, said a CITIC Se­cu­ri­ties re­search re­port. “We re­main up­beat about China’s sta­ble growth in the sec­ond half.”

The sub-in­dex for the con­struc­tion sec­tor rose to 62.5 in July from 61.4 in June, ac­cord­ing to the break­down of the July PMI.

That for pro­duc­tion ac­tiv­ity ex­pec­ta­tion rose to 59.1, up from 58.7 in June. It had risen for three con­sec­u­tive months, “in­di­cat­ing that en­ter­prises were more con­fi­dent in their fu­ture de­vel­op­ment”, ac­cord­ing to Zhao from the NBS.

But new fac­tory or­ders dropped to 52.8 from 53.1 in June, and ex­port or­ders fell to 50.9 from 52.0.

“The break­down sug­gests weaker for­eign de­mand is partly to blame — the new ex­port or­ders fell by a larger mar­gin than over­all new or­ders,” Ju­lian Evans-Pritchard, a Sin­ga­pore-based China econ­o­mist at Cap­i­tal Eco­nom­ics, was quoted by Reuters as say­ing.

China posted stronger than ex­pected year-on-year GDP growth of 6.9 per­cent in the first half of this year, fu­eled by ris­ing in­fra­struc­ture in­vest­ment, im­prov­ing ex­ports and ro­bust re­tail sales. But it is feared that growth may weaken in the sec­ond half due to the cool­ing of real es­tate in­vest­ment as a re­sult of tight­ened reg­u­la­tion.

“July’s PMI sig­nals a slight soft­en­ing of the man­u­fac­tur­ing sec­tor,” Ray­mond Ye­ung, the Hong Kong-based chief econ­o­mist at Aus­tralia & New Zealand Bank­ing Group Ltd, told Bloomberg. “Ex­ter­nal de­mand will likely drop in the sum­mer and third quar­ter GDP growth isn’t ex­pected to hit 6.9 per­cent. But we aren’t wor­ried about the de­cline to­day.”

As the global de­mand rises and com­mod­ity prices are ex­pected to con­tinue to rise mod­er­ately in the sec­ond half, China will not face much growth pres­sure in the com­ing months, said the CITIC Se­cu­ri­ties re­port.


A worker per­forms a sol­der­ing job at an auto man­u­fac­tur­ing plant in Xi’an, cap­i­tal of Shaanxi prov­ince.

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