According to IHS Markit, a London based leading research and consulting firm, its recently released Hong Kong Purchasing Managers Index (PMI) shows that, in the month of August, Hong Kong’s business activity experienced its biggest decline since 2008.

The report pointed to the fact that Hong Kong’s business confidence has dropped to a record low. Pessimism continues to spread in major companies. The IHS Markit’s Hong Kong PMI, adjusted for seasonal fluctuations, fell from 43.8 in July to 40.8 in August, the worst month since February 2009. In general, an index above 50 represents an increase in activity in the private economy, while below 50 represents a decline. The calculation of the index includes statistics on new orders, outputs, employment, suppliers’ delivery time, and inventory purchases.

According to IHS Markit’s PMI index, Hong Kong’s economy has been declining for 17 consecutive months. The number of orders that mainland China placed in Hong Kong has fallen sharply. Almost half of the companies surveyed said that orders from mainland China had decreased. They believe that the Sino-US trade war, the sharp depreciation of the renminbi, and the large-scale demonstrations in Hong Kong are the reasons for the decline in orders from the mainland.

Bernard Aw, an economist at IHS Markit, said the latest survey shows that the Hong Kong economy is shrinking at a rate of 4 percent to 4.5 percent. In August of this year, the output, new orders, and the export volume of Hong Kong companies fell sharply. In the history of the company’s compilation of the PMI index, which is more than 20 years, only the 2003 SARS epidemic and the 2008-09 financial crisis were worse than today.

Even worse, more and more companies surveyed believe that the situation will deteriorate even further in the next 12 months. According to IHS Markit, about one-quarter of companies in July were pessimistic about the coming year; in August one-third of respondents held a gloomy outlook.

Source: Deutsche Welle, Chinese channel, September 4, 2019
https://p.dw.com/p/3OzWQ

Well-known Chinese news site NetEase recently reported that China’s National Bureau of Statistics just released its August Manufacturing PMI (Purchasing Managers Index) number. The PMI index for the Chinese manufacturing sector was 49.5 percent. This is the fourth consecutive month in which PMI has remained below 50 percent. The key sub-indicators that dragged down the overall PMI number were New Orders (49.7 percent), Raw Materials Inventory (47.5 percent) and Employment Level (46.9 percent). Data also showed medium and small companies suffered the most. Large corporations are in a better shape. PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.

Source: NetEase, August 31, 2019
https://money.163.com/19/0831/09/ENT7EMEB00258105.html

On September 6, Hu Chunhua, China’s Vice Premier of the State Council, said during his trip to northeast Heilongjiang province that ensuring the supply of pork is one of the most urgent tasks of the current agricultural work. Hu mandated that all production areas accomplish the task of ensuring a stable production and supply “one hundred percent,” and that they clean up improper practices in raising pigs.

In the past six months, after the outbreak of African swine fever in China, the retail price of pork soared. This led to a rise in the price of food and other livelihood products. At present, it is a “significant major political task” to restore pig production and stabilize pork prices.

Heilongjiang province is one of China’s main pig production areas. Hu Chunhua was inspecting pig slaughtering and processing companies and breeding bases in Mudanjiang city on September 6. Hu was there to learn about the main problems facing pig production, the demands from farmers and firms, and the impact of the African swine fever epidemic.

Source: Central News Agency, September 7, 2019
https://www.cna.com.tw/news/acn/201909070053.aspx

The People’s Bank of China (PBOC) announced on Friday, September 6, that it would lower the reserve requirement ratio for financial institutions by 0.5 percent, effective September 16. China’s central bank said the move was to support the real economy and reduce social financing costs. The reserve requirement ratio is the minimum amount of reserves that must be held by a commercial bank.

In addition, the PBOC will lower the reserve ratio of 1 percent for the urban commercial banks. These measures are to be implemented on October 15 and November 15, respectively, with a 0.5 percent reduction each time. In other words, the PBOC will have successively lowered the reserve ratio for urban commercial banks three times, with a total reduction of 1.5 percent.

It is estimated that this round of ratio reductions will release funds of 900 billion yuan ($126 billion).

Earlier this year, the PBOC already implemented two rounds of reductions: a comprehensive ratio reduction of 0.5 percent in January and another 0.5 percent reduction for small and medium-sized banks between May and July.

Source: Radio Free Asia, September 6, 2019
https://www.rfa.org/cantonese/news/bank-09062019112953.html