Amid serious crackdowns on the private sector and a severe power outage, China’s official manufacturing purchasing managers’ index (PMI) dropped to a 19 month low of 49.6 in September from 50.1 in August leading to worries that economic recovery for the Asian giant could take longer than expected. In July, China's official PMI stood at 50.4.
An increase in raw material costs and supply side constraints have also had a direct impact on the factory output.
The PMI is an indicator, reflecting the trends of economic trends in the manufacturing and service sectors.
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A reading below 50 is taken as a contraction.
China was the first country to bounce back after the brutal Covid 19 pandemic.
Shakti Sinha director, Atal Bihari Vajpayee Institute of Policy Research and International Studies, MS University told India Narrative that China’s dream growth run of 30 years is now slowing down.
“There are many internal issues in China which are leading to an overall slowdown of growth..the problems have been there for sometime now but since there is limited data it is difficult to assess the real situation,” Sinha said, comparing the problem with chronic blood pressure issues.
“It is like a patient has BP..you know there is a perennial issue but how critical it is, we are yet to know,” he said.
“The weak PMI will send an alarm to the government,” South China Morning Post quoted Zhang Zhiwei, chief economist at Pinpoint Asset Management as saying.
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He also said that economic growth in the fourth quarter could further slow down without a change of government policies.
The real estate sector, one of the primary growth engines in China, has also suffered a massive setback with the Evergrande Group crisis.
The news organisation also said that the country’s economy appears to have taken a turn for the worse as manufacturing activity among large firms slipped into contraction in September, sounding the alarm on a deepening slowdown amid a national electricity crunch, raw material inflation, regulatory crackdowns and fresh Delta variant outbreaks.
