China’s economy has been rather unstable this year. Sometimes the signals point to growth, sometimes Beijing has to record setbacks. Why is China not getting going?
The management levels in China’s manufacturing sector continue to view the market situation with caution. The purchasing managers’ index (PMI) for the sector was at 49.5 points in June, as the Chinese statistics office announced in Beijing on Sunday. This means that the leading indicator, which is important for decision-makers and investors, did not exceed the 50 point mark for the second month in a row, above which statisticians expect an expansion in industrial activity. Analysts had previously expected a similar value. In the previous month, the authority had also determined 49.5 points.
In the non-manufacturing sector, which includes the services sector and the construction industry, the mood deteriorated by 0.6 points compared to the previous month to 50.5 points, which was only slightly above the expansion threshold. The index published by the statistics office reflects the situation at state-owned companies. From the authority’s point of view, the Chinese economy remains on an expansion course, but the basis for a sustained improvement must be consolidated, the statement said.
China’s government continues to fight a real estate crisis that has been going on for years. The sector has been a popular way for Chinese people to invest money for years. Due to losses in value and falling prices, many households have less money to spend, which is contributing to weak domestic consumption. Added to this is a high unemployment rate among young people and pressure on international trade due to sanctions, such as in the USA, an important export market for China. The EU has also threatened tariffs on electric cars made in China.
Source: Stern
