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RFA Chinese: China’s Manufacturing Industry Marks Fifth Consecutive Month of Contraction

Radio Free Asia (RFA) Chinese Edition recently reported that, according to the data jointly released by the National Bureau of Statistics of China and the China Federation of Logistics and Purchasing, the Chinese manufacturing PMI in August was 49.7, an increase of 0.4 points from the previous month. This is the fifth consecutive month that the Chinese manufacturing PMI has been below the critical threshold of 50 (the “line of prosperity”), indicating ongoing contraction in Chinese manufacturing.

Among the five sub-indices that make up the manufacturing PMI, the production index was 51.9, the new order index was 50.2, and the supplier delivery time index was 51.6, higher than the critical point of 50. The raw material inventory index was 48.4 and the employment index was 48.0, both below the critical point. The Purchasing Managers Index (PMI) is an internationally accepted macroeconomic monitoring indicator. The number 50 is usually used as the boundary for indicating growth or decline.

In an environment where new export orders continue to contract amid weak global demand, Chinese manufacturers will need to rely on domestic demand to make up for the shortfall. Currently, demand for Chinese real estate and exports continues to be sluggish, and insufficient demand in the economy overall constrain prospects for economic recovery.

In order to stimulate China’s real estate market, the Chinese government has recently introduced a number of measures. The central bank will now guide commercial banks to adjust the interest rates of existing personal housing loans “in an orderly manner” so as to reduce the pressure on residents who are faced with mortgage loan repayments.

Source: RFA Chinese, August 31, 2023