Chinese manufacturing output increased at its slowest rate for 17 months in July – in line with a general production slowdown across much of Asia – according to the HSBC China Manufacturing Purchasing Managers Index.
The Index revealed that Chinese manufacturing output contracted from 52.1 in June to 51.2 in July (figures of 50 or above represent growth), the first such contraction since the economy began to rebound from recession in March 2009. The Chinese Federation of Logistics and Purchasing and the National Bureau of Statistics concurred with the figures.
The reason for the slowdown is being attributed to the government’s greater controls on bank lending, which have forced Chinese banks to reduce lending to businesses amid renewed fears of significant loan defaults. The tightening of bank lending has stifled booming property prices and affected manufacturing. The Chinese government has also reigned in its stimulus spending on construction projects, and placed new controls on investing in high-energy consuming and polluting factories. Analysts are split as to whether this represents just a short-term slowdown in Chinese manufacturing, or is a sign of slower growth to come later in 2010.
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Chinese Manufacturing Slows in July As Bank Lending Controls Bite
Chinese manufacturing output increased at its slowest rate for 17 months in July – in line with a general production slowdown across much of Asia – according to the HSBC China Manufacturing Purchasing Managers Index.
The Index revealed that Chinese manufacturing output contracted from 52.1 in June to 51.2 in July (figures of 50 or above represent growth), the first such contraction since the economy began to rebound from recession in March 2009. The Chinese Federation of Logistics and Purchasing and the National Bureau of Statistics concurred with the figures.
The reason for the slowdown is being attributed to the government’s greater controls on bank lending, which have forced Chinese banks to reduce lending to businesses amid renewed fears of significant loan defaults. The tightening of bank lending has stifled booming property prices and affected manufacturing. The Chinese government has also reigned in its stimulus spending on construction projects, and placed new controls on investing in high-energy consuming and polluting factories. Analysts are split as to whether this represents just a short-term slowdown in Chinese manufacturing, or is a sign of slower growth to come later in 2010.
This entry was posted on Monday, August 23rd, 2010 at 4:43 am and is filed under News commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.