China Manufacturing News


Manufacturing index shows signs of China cooling

By online business reporter Michael Janda

Posted Mon May 23, 2011 4:02pm AEST

China's manufacturing sector is growing at its slowest pace since July last year, but is still consistent with strong economic growth overall.

Banking giant HSBC's monthly flash manufacturing index for China was at 51.1 in May, which is only slightly above the level separating expansion from contraction.

However, the bank says the current index is consistent with Chinese economic growth of 9 per cent over the year.

HSBC says manufacturers continued to run down their large inventories of stock, and also received less new export orders.

The bank says the fall in export orders is likely to be because of continued disruptions to global manufacturing chains caused by Japan's earthquake, tsunami and nuclear crisis.

However, HSBC says the slowdown is likely to assist the Chinese government's efforts to rein in inflation, with the price of manufacturing inputs and output both easing closer to long-term averages.

The bank's economists believe Chinese authorities will continue to focus on reducing inflation over the next few months, but say they do not expect an economic hard landing for China.



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BEIJING (AP) — Chinese manufacturing expanded for a fifth straight month in April in data that analysts say indicate the country's economic activity is picking up moderately.


Economic growth slowed to 8.9 percent in the final quarter of last year after Beijing hiked interest rates and tightened other controls to cool inflation.

Chinese leaders reversed course in December and promised more bank lending to help companies cope with the slump in global demand, but changes have been gradual.

Manufacturing tends to pick up in the spring, as construction resumes in regions affected by winter weather. But economists cautioned that the data did not suggest a full-fledged rebound in growth.

"Expect no deflationary spiral or credit crunch, but expect no grand 'V-shaped' recovery or healthy sheen either. Whilst things do look better, it is too early to break out the champagne," Alistair Thornton, an economist with IHS Global Insight, said in a comment Tuesday.

With inflation a lingering threat, policymakers are treading a fine line in trying to spur growth without adding to price pressures.

"China remains in a tough spot," it said, adding that "the recovery will be slower, more volatile and less assured than perhaps markets were hoping for."

A similar monthly survey by HSBC is due for release Wednesday, after Tuesday's May Day public holiday.