China’s man­u­fac­tur­ing sec­tor sees recovery in July, though ane­mic

Global Times US Edition - - BIZUPDATE - By Song Lin Page Edi­tor: [email protected]­al­

China’s man­u­fac­tur­ing sec­tor has seen mild recovery in July, show­ing the gov­ern­ment’s proac­tive fis­cal and mon­e­tary poli­cies are kick­ing in and start­ing to shore up the growth.

The of­fi­cial man­u­fac­tur­ing pur­chas­ing man­agers’ in­dex (PMI), a pre­lim­i­nary read­out of the coun­try’s man­u­fac­tur­ing ac­tiv­ity, came in at 49.7 for July, 0.3 per­cent­age points higher than the pre­vi­ous month, ac­cord­ing to data from the Na­tional Bureau of Sta­tis­tics (NBS) on Wed­nes­day.

The recovery is deemed ane­mic, ac­cord­ing to mar­ket watch­ers.

“The lat­est fig­ure in­di­cates that the slow­down pres­sure on the man­u­fac­tur­ing sec­tor has mildly eased,” Liu Xuezhi, a se­nior econ­o­mist at Bank of Com­mu­ni­ca­tions, told the Global Times on Wed­nes­day.

The en­hanced tax and fee-re­duc­tion pol­icy, worked out since April, has brought about pos­i­tive influence for man­u­fac­tur­ing in­dus­tries, Liu said.

Ac­cord­ing to Xinhua News Agency, China’s newly-in­tro­duced tax cuts and fee re­duc­tions have saved busi­nesses around 1.17 tril­lion yuan (about $170 bil­lion) in the first half of 2019, which greatly helped Chi­nese busi­nesses.

Zhao Qinghe, an­a­lyst from NBS said in a state­ment that there have been many pos­i­tive changes in the man­u­fac­tur­ing sec­tor. For ex­am­ple, 12 out of the 21 man­u­fac­tur­ing cat­e­gories are ex­pand­ing their busi­ness, three more than the pre­vi­ous month. And, over­all ex­pan­sion of man­u­fac­tur­ing pro­duc­tion has ac­cel­er­ated and mar­ket de­mand also im­proved in July, Zhao said.

How­ever, the slow­down pres­sure re­mains as PMI readings are stay­ing in the con­trac­tion range, Liu noted, and weak­en­ing de­mand is a ma­jor cul­prit.

A PMI read­ing above 50 points sug­gests in­dus­trial ex­pan­sion, while one lower than that sug­gests con­trac­tion.

In spe­cific terms, the PMI for large com­pa­nies rose to ex­pan­sion territory at 50.7 per­cent, up 0.8 per­cent­age points on a monthly ba­sis, while that of mid­dle- and small-size com­pa­nies re­mained trapped in the con­trac­tion area.

Liu said that mid­dle- and small-size firms take up a large pro­por­tion of China’s man­u­fac­tur­ing sec­tor and there­fore bear more pres­sure now. More tax re­lief, fee re­duc­tions and other mea­sures are needed to al­ley their pres­sure.

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