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Mainland industry shows a slowdown
By Wang Yanlin |
August 2, 2010, Monday
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Online Edition
Online Edition
CHINESE manufacturing sector fell into the territory of contraction last month for the first time since May 2009, a HSBC survey showed today.
It compared with the official Purchasing Managers' Index produced by the China Federation of Logistics and Purchasing, which still stood at 51.2 in July.
The HSBC China Manufacturing PMI softened to 49.4 last month from 50.4 in June, falling below the neutral 50 threshold that divided expansion and contraction. It ended a 16-month streak of continued growth for China's manufacturing sector and marked a distinct turnaround from the strong sector performance seen at the beginning of 2010.
The HSBC survey is slanted more towards privately-owned and export-oriented firms, while the official PMI is weighted heavily towards big domestic companies.
"The decline suggests that production growth continued to decelerate last month," said Qu Hongbin, a senior economist of Asian Economic Research at HSBC. "It is because of the combined effect of credit tightening, property cooling measures and Beijing's decision to cut capacity in energy-intensive sectors."
But Qu said the slowdown was not a source of worry.
"There is no need to panic because it is just a slowdown, not a meltdown," Qu said. "We still expect the economy to rely on continued investment into ongoing infrastructure products, public housing construction and resilient private consumption to grow by around 9 percent in the second half of 2010 and 2011."
China's gross domestic product moderated to grow 10.3 percent in the second quarter, down from the surge of 11.9 percent in the first three months.
It compared with the official Purchasing Managers' Index produced by the China Federation of Logistics and Purchasing, which still stood at 51.2 in July.
The HSBC China Manufacturing PMI softened to 49.4 last month from 50.4 in June, falling below the neutral 50 threshold that divided expansion and contraction. It ended a 16-month streak of continued growth for China's manufacturing sector and marked a distinct turnaround from the strong sector performance seen at the beginning of 2010.
The HSBC survey is slanted more towards privately-owned and export-oriented firms, while the official PMI is weighted heavily towards big domestic companies.
"The decline suggests that production growth continued to decelerate last month," said Qu Hongbin, a senior economist of Asian Economic Research at HSBC. "It is because of the combined effect of credit tightening, property cooling measures and Beijing's decision to cut capacity in energy-intensive sectors."
But Qu said the slowdown was not a source of worry.
"There is no need to panic because it is just a slowdown, not a meltdown," Qu said. "We still expect the economy to rely on continued investment into ongoing infrastructure products, public housing construction and resilient private consumption to grow by around 9 percent in the second half of 2010 and 2011."
China's gross domestic product moderated to grow 10.3 percent in the second quarter, down from the surge of 11.9 percent in the first three months.
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