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Manufacturing & Industry

Final China HSBC PMI dips to six-month low in January as new orders weaken


A worker assembles a generator at a factory in Hefei, Anhui province

A worker assembles a generator at a factory in Hefei, Anhui province

Business conditions for China’s manufacturers worsened in January as output and new order growth weakened, a private survey showed on Thursday, pointing to a weak start for the economy in 2014.

The Markit/HSBC final manufacturing PMI for January dipped to 49.5 from December’s 50.5, the first deterioration in six months. The figure was in line with the 49.6 reported in the preliminary version of the PMI released a week earlier.

A reading below 50 indicates a contraction while one above shows expansion.

The survey, an early indication of sentiment in the 56.9 trillion yuan ($9.4 trillion) economy, found growth rates in output and new business weakening, while companies cut jobs at the fastest rate since March 2009.

“A soft start to China’s manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January,” said Hongbin Qu, chief economist for China at HSBC, in a statement.

“Policymakers should pay attention to downside risks and pre-emptively fine-tune policy to steady the pace of growth if needed.”

Last week’s flash PMI reading, which coincided with renewed signs of tightening in China’s financial markets, had contributed to a fall in global markets as investors fretted over the impact worldwide of a China slowdown.

However, many economists and experts say that Beijing will act if the economy loses traction too quickly even as it pushes towards more balanced and sustained economic growth.

China’s leaders have pledged to push reforms to unleash new growth drivers as the world’s second-largest economy loses steam, burdened by industrial overcapacity, piles of debt and soaring house prices.

That means reducing government intervention to allow market forces to have a bigger say in allocating resources, and promoting domestic consumption at the expense of investment and exports.

China’s annual economic growth slowed to 7.7 percent in the fourth quarter of 2013 from 7.8 percent in the previous quarter, putting full-year growth at 7.7 percent, slightly ahead of the government’s target of 7.5 percent.

While the economy narrowly missed expectations for full-year growth to fall to a 14-year low in 2013, some economists say a further cooldown will be inevitable this year as officials hunker down for difficult reforms.

Still, the majority view of China economists polled by Reuters remains that Beijing will manage to sustain economic growth broadly in line with both last year’s 7.5 percent growth target and the International Monetary Fund‘s predictions.

Sources with top think-tanks have said the government likely will stick with the 7.5 percent target this year.

The PMI showed a reduced amount of export orders in January, indicating weak demand overseas, and an increase in inventories.

Source: Reuters “Final China HSBC PMI dips to six-month low in January as new orders weaken”
 

 

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About chankaiyee2

Author of the book "Tiananmen's Tremendous Achievements" about how with the help of Tiananmen Protests, talented scholars with moral integrity seized power in the Party and state and brought prosperity to China. The second edition of the book will be published within a few days to mark the 25th anniversary of Tiananmen Protests All the parts in the first edition remain in the second edition with a few changes due to information available later and better understanding. There are also some changes for improvements of style. The new parts are Chapters 12-19 on events in China after the first edition was published: The fierce power struggle for succession between reformists and conservatives; Xi Jinping winning all elders’ support during his mysterious disappearance for 2 weeks in early September, 2012; and Xi Jinping Cyclone. Chan Kai Yee's new book: SPACE ERA STRATEGY: The Way China Beats The US An eye-opening book that tells the truth how the US is losing to China. The US is losing as it adopts the outdated strategy of Air-Sea Battle while China adopts the space era strategy to pursue integrated space and air capabilities: It is losing due to its diplomacy that has given rise to Russian-Chinese alliance. US outdated strategy has enabled China to catch up and surpass the US in key weapons: Hypersonic weapons (HGV) that Pentagon regards as the weapon that will dominate the world in the future. Aerospaceplane in China’s development of space-air bomber that can engage enemy anywhere in the world within an hour and destroy an entire aircraft carrier battle group within minutes. Anti-satellite (ASAT) weapons, anti-ASAT weapons, stealth aircrafts, drones, AEW&C, etc. The book gives detailed descriptions of China’s weapon development based on information mainly from Chinese sources that the author monitors closely. U.S. Must Not Be Beaten by China! China is not a democracy. Its political system cannot prevent the emergence of a despotic leader or stop such a leader when he begins to bring disasters to people. A few decades ago, Mao Zedong, the worst tyrant in world history did emerge and bring disasters to Chinese people. He wanted to fight a nuclear war to replace capitalism with communism but could not bring nuclear holocaust to world people as China was too weak and poor at that time. If a despot like Mao Zedong emerges when China has surpassed the US in military strength, world people will suffer the misery experienced by Chinese people in Mao era. China surpassing the US in GDP is not something to worry about as China has the heavy burden to satisfy its huge population, but China surpassing the US in military strength will be world people’s greatest concern if China remains an autocracy. US people are of much better quality than Chinese people. What they lack is a wise leader to adopt the correct strategy and diplomacy and the creative ways to use its resources in developing its military capabilities. I hope that with the emergence of a great leader, the US can put an end to its decline and remain number one in the world. China, US, space era strategy, air-sea battle, space-air bomber, arms race, weapon development, chan kai yee

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