China’s economy has deteriorated further in recent weeks, according to a survey released Monday, suggesting the need for more support as the government ramps up stimulus.
New manufacturing orders fell at the fastest pace in two years in September, according to Caixin’s survey of purchasing managers.
“The operating situation in China’s manufacturing industry improved during August, but worsened in September,” the report said. “Furthermore, companies have scaled back their hiring and purchasing activities.”
Market expectations. Problem of lack of effective domestic demand
Remains significant and continues to experience significant pressures and weakening on employment
According to an official survey released by the National Bureau of Statistics, although the decline was not that sharp, it was the fifth consecutive month of decline. The Purchasing Managers’ Index for September was 49.8, up from 49.1 in August, the lowest level in six months. The index is based on a scale where numbers above 50 indicate expansion.
According to the survey, factory production increased, but new orders decreased.
Chinese stock markets rose on Monday, reflecting enthusiasm over a series of policies announced last week, including lower interest rates, reduced down payment requirements for mortgages and reduced reserve requirements.
“There is no doubt that the coordinated and focused policy stimulus announced by the Chinese government has naturally sparked optimism,” said Tan Boon Heng of Mizuho Bank in Singapore. mentioned in.
Shenzhen’s main index small market soared 8.2%, and the Shanghai Composite Index rose 5.7%.
“The stimulus package announced last week will help dampen economic activity in the coming months,” Gabriel Ng of Capital Economics said in a note. However, he noted that the imbalance between oversupply and weak demand for many products persists. Trade measures with China, such as higher tariffs on electric cars and other products, will also weigh on the economy.
“A meaningful cyclical recovery in this environment will require significant fiscal stimulus,” he said. “While there has been no official announcement regarding financial support yet, some media reports suggest it may be announced soon.”
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Over the weekend, the Chinese government advanced measures announced last week to support the real estate industry and revive struggling financial markets. The People’s Bank of China announced on Sunday that it would direct banks to lower mortgage interest rates on existing home loans by October 31. Meanwhile, Guangzhou, a major city in the south, lifted all home purchase restrictions over the weekend, and both Shanghai and Shenzhen unveiled easing plans. Important Purchase Restrictions.
Property developers have struggled since the government cracked down on excessive borrowing for projects several years ago. House prices continue to fall, and the government is moving to ensure developers deliver apartments paid for but not yet built.
The downturn in the real estate sector has rippled through the world’s second-largest economy, hurting many other industries that depended on booming housing construction, including appliance makers and building materials manufacturers.
This has slowed the country’s recovery from the massive disruption caused by the coronavirus pandemic, adding to pressure on Chinese consumers worried about wage cuts, job losses and falling asset prices.
The economy expanded at a pace of 4.7% last quarter, slightly below the government’s target of about 5%.
Elaine Kurtenbach, Associated Press
