Chinese manufacturing declines for seventh straight month
Beijing (AsiaNews/Agencies) - Europe's crisis and high unemployment in the United States are putting a break on China's economic growth. For the seventh straight month, the HSBC Flash Purchasing Managers Index retreated, from 49.3 in April to 48.7 in May. Anytime, the index drops below 50, it indicates contracting economic activity. Exports figures are also down compared to April when they were still rising.
In a statement announcing the slowdown, the HSBC called on Chinese authorities for more stimuli through rate cuts to stabilise the economy.
Since April's data, economists have pushed back their forecasts for a recovery in China's growth cycle and now expect the bottom to be hit in the second quarter.
China's manufacturing activity contracted in May because of declining foreign orders. "This calls for more aggressive policy easing, as inflation continues to slow," said Qu Hongbin, Hong Kong-based chief China economist for HSBC. "As long as the easing measures filter through, China will secure a soft landing in the coming quarters".
China's state council, or cabinet, is aware of the downside risks facing the economy. For this reason, it "must proactively take policies and measures to expand demand and to create a favourable policy environment for stable and relatively fast economic growth," read a statement on its website summarising its meeting yesterday.
An economic recession, Beijing fears, might lead to heightened social tensions at home.
China's annual rate of growth is expected to slide to 7.9 per cent in the second quarter, down from 8.3 per cent, a benchmark Reuters poll showed. Overall, this year's growth should be 8.2 per cent, above the government's 7.5 per cent target.
However, everything depends on what happens in Europe, China's main export market. If European economies take a plunge because of the Greek crisis, Chinese exports should follow.
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