Official data released on Saturday revealed that Chinese manufacturing shrank for the fourth consecutive month in August. This outcome was worse than anticipated and was indicative of the second-largest economy in the world’s slow recovery.
In addition to low confidence among individuals and businesses that is impeding consumption, China is also dealing with a crisis in its massive real estate industry. Meanwhile, geopolitical tensions with the United States and the European Union pose a threat to international trade.
The National Bureau of Statistics (NBS) reported that the Purchasing Managers’ Index (PMI), a crucial indicator of industrial output, was 49.1 points in August.
This indicates a more robust decrease for the index—which is partly based on firm order books—than it did in July (49.4 points).
A manufacturing activity index above 50 signifies growth, whereas one below that denotes recession.
According to a Bloomberg survey, analysts had predicted a fall in August, albeit a more mild one of 49.5.
China’s recovery from COVID-19 has been slower and less substantial than anticipated.
While some industries, including the travel and tourist sector and the car industry, have mostly recovered, other industries, like real estate, which is a major development engine, are having difficulties.
Services are included in the non-manufacturing PMI, which was in positive territory in August at 50.3 points as opposed to 50.2 points the previous month.
China, which was once the world’s factory for low-cost goods, is currently changing its economic model in an effort to become a hub for emerging high-tech sectors like artificial intelligence.
China produced a set of economic data in mid-August that were seen as disappointing given previous attempts by the government to stimulate growth.
Official numbers show that in July, demand for bank loans shrank for the first time in almost two decades, further suggesting a downturn.
