China’s manufacturing sector has recorded its third consecutive month of decline in July, signaling persistent economic challenges despite recent government efforts to stimulate growth in the world’s second-largest economy.
The National Bureau of Statistics reported on Wednesday that the manufacturing Purchasing Managers’ Index (PMI) for July fell to 49.4, down from 49.5 in June. This marks a five-month low and remains below the crucial 50-point threshold that separates growth from contraction.
Zhao Qinghe, a senior statistician, cited “the impact of off-season production, insufficient market demand, high temperatures, floods, and extreme weather in some areas” as factors contributing to the decline.
The construction sector has also experienced a similar decline. The growth index for non-manufacturing business activity dropped by 0.3 points to 50.2, its lowest level since November. This trend suggests that infrastructure spending may no longer be effectively counterbalancing the downturn in property construction, according to analysts.
China’s economic struggles are further evidenced by its second-quarter GDP growth of 4.7%, which fell short of the government’s annual target of “around 5 percent.” The economic slowdown is largely attributed to a slumping property market and weak domestic demand.
In response to these challenges, Chinese authorities have implemented various measures to boost the economy. Following the Third Plenum meeting in Beijing in July, China’s central bank cut two key policy interest rates to “step up financial support for the real economy.” However, the impact of these measures appears limited so far, with total retail sales of consumer goods rising only 2.0% last month, the slowest pace since December 2022.
The property market continues to be a significant drag on the economy, with investment dropping by 10.1% during the first half of the year. Home prices are falling in cities across the country, further complicating economic recovery efforts.
(Inputs from ANI)