China, the first country to bounce back after the brutal Covid 19 pandemic, witnessed a slower pace of growth in its factory activity in August primarily due to an increase in raw material costs and supply side constraints.
The slowdown has come amid China’s uncertain economic policy measures as the country President Xi Jinping kicked off the “common prosperity” plan which is a major shift from the previous policy alignment facilitating economic prosperity.
While the Caixin/Markit China manufacturing purchasing managers’ index in August stood at 49.2 from 50.3 in July, the official manufacturing PMI slowed to 50.1 in August from 50.4 in July, as per the National Bureau of Statistics (NBS) data.
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A reading below 50 is taken as a contraction.
The two sets of data can be confusing but the NBS’ official PMI is an indicator of GDP and industrial production and the Caixin/Markit reading in primarily an indicator of exports.
Even the NBS PMI indicator has been coming down for the last few months.
The Guardian said that “China, as the first country to succumb to pandemic-fuelled recession and the first to emerge, is however now spooking international investors, fearful that a summer blip in growth could herald a longer-term slump lasting into 2022.”
It further said that “signs of pressure are emerging in the Chinese economy as it embarks on Xi’s mission, fuelled by the coronavirus Delta variant and raw material shortages.”
