China Watch Blog

China Watch Blog has picked up this news from a Shanghai Daily report that China’s manufacturing activity continued to grow at a slower pace last month as the government took measures to curb the risk of overheating and adjust the economic structure.

The official Purchasing Managers’ Index, a comprehensive gauge of industrial activity, eased 0.9 percentage points from a month earlier to 51.2% in July, the China Federation of Logistics and Purchasing said.

A reading above 50 points indicates expansion, and it has stood above 50 points for 17 straight months. However, the index is down for the third consecutive month and is at its lowest since February 2009, when it fell below 50.

“The slowdown in the manufacturing sector signals that economic growth will continue to moderate. And the growth of investment and exports are not yet stable,”  Zhang Liqun, a federation analyst said, adding that he did not see much possibility of a sharp contraction in investment and negative growth in exports.

“The country could keep full-year economic growth at around 9.5 percent as both the domestic and overseas markets are improving and there is increasing room for the government to fine-tune its policy,” Zhang said.

Ten out of 11 subcomponent indices of the official PMI declined compared with the previous month’s reading, including input price, new orders and new exports.

July’s industrial output dropped the most among the indices, by 3.1 percentage points to 52.7%. The index for ferrous and nonferrous metals, rubber, plastics and other raw materials and chemical industries fell below 50 due to measures to rein in energy-intensive firms.

China’s economy grew 10.3% in the second quarter of this year, down from 11.9% in the first quarter.

China Watch Blog has learnt that the Hong Kong business outlook in the third quarter, particularly in the real estate, manufacturing, financing and insurance, and transportation, storage and courier services sectors is favourable based on a Census & Statistics Department survey.

The Quarterly Business Tendency Survey released over the weekend showed 32% of respondents expect an improvement in the business situation in the nancing,insurance, and transportation, storage and last quarter, while only 6% expect it to be worse.

All surveyed sectors expect a rise in the volume of business or output, particularly in the real estate, transportation, storage and courier services, financing and insurance, manufacturing, and retail sectors.

Significantly more respondents in sectors like financing and insurance, professional and business services, and real estate expect employment to increase, than those expecting a fall.

Almost all sectors also expect their selling price and service charges to rise in the third quarter, particularly the real estate sector.