Economic strife in west hobbles China
BEIJING - Agence France-PresseChina’s manufacturing activity continued to shrink in December, HSBC said on Dec. 30, as economic strife in the key European and U.S. markets hobbled demand for the nation’s goods. The final HSBC purchasing managers’ index (PMI) reached 48.7 points in December, slightly better than the 47.7 in November, but lower than preliminary PMI of 49 released earlier this month. A reading above 50 indicates expansion, while a reading below 50 suggests a contraction.
While the figures are a slight improvement, the data adds to mounting evidence export-driven China is slowing and will ratchet up pressure on Beijing to further loosen monetary policies to prevent a painful hard landing. Manufacturing activity contracted in November for the first time in 33 months, while consumer prices rose at their slowest pace in more than a year and industrial output growth hit its lowest level since 2009.
“Weakening external demand is starting to bite,” Qu Hongbin, HSBC chief economist, said in a statement.
“This, plus the ongoing property market corrections, adds to calls for more aggressive action on both fiscal and monetary fronts to stabilize growth and jobs, especially with prices easing rapidly.”
Beijing is anxious to prevent a sharp slowdown in the economy but at the same time it wants to avoid reigniting inflation.