Newspaper article International New York Times

Manufacturing Slowdown Continues to Plague China ; but Some Economists See Resilience, as the Services Sector Remains Vibrant

Newspaper article International New York Times

Manufacturing Slowdown Continues to Plague China ; but Some Economists See Resilience, as the Services Sector Remains Vibrant

Article excerpt

But some economists say the Chinese economy may be more resilient than it seems, reflecting government stimulus and growth in the services sector.

China's sprawling manufacturing sector continued to shrink in September, data released on Thursday showed, despite strength in service industries.

Yet some economists said that because of unprecedented government spending, monetary stimulus and a growing services sector, China's economy as a whole might be more resilient than it seems at first glance.

"All this talk about this impending crisis just seems so far off the mark, when you look at these indicators," said Julian Evans- Pritchard, an economist following China at Capital Economics.

Chinese and Hong Kong stock markets were closed on Thursday for a holiday, but other Asia markets were up. And that momentum carried over to European stocks, which opened strongly higher -- despite new manufacturing data indicating only slow growth in the eurozone and signs of a potential slowdown in Britain. By the end of the day, the indexes were mostly down.

For China, manufacturing output, as measured by the official purchasing managers index, was 49.8 in September, compared with a reading of 49.7 in August. The official nonmanufacturing survey result was 53.4, unchanged from August. The survey measures the change in conditions from the previous month; readings below 50 signal contraction.

The results of another survey, compiled by Caixin, a Chinese financial news company, and Markit, an economic data provider, suggested a worse picture. The Caixin manufacturing purchasing managers index, also released on Thursday, was 47.2 in September, down slightly from 47.3 in August and the lowest reading since the depths of the global financial crisis in March 2009.

China's economic growth has been battered in recent months by a fall in housing construction. That has led to a huge surplus in materials like steel and cement, which has idled plants or caused them to operate at a loss.

"The industry has reached a crucial stage in its structural transformation," He Fan, the chief economist at the Caixin Insight Group, said in a news release accompanying the data. …

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