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CHINA PMI POINTS TO FURTHER CONTRACTION

22 September 2011 by Cullen Roche 5 Comments

China’s PMI softended in the first three weeks of September according to HSBC’s PMI index.   The headline figure declined to 49.4 in September from 49.9.  Hongbin Qu, HSBC’s China Chief Economist commented on the slowing growth:

“This is a similar moderating growth picture as in the previous two months. Fears of a hard landing are unwarranted. External demand weakened a little but official trade data still show solid export growth. China is less dependent on net exports, whose contribution to GDP growth was almost zero in 1H. Resilient domestic demand is sufficient to support around 8.5-9% growth in the coming quarters.”

It’s clear that China’s growth continues to moderate although we’re not seeing a steep contraction in growth. Regardless, this is another sign of a generally fragile global economic situation.

Source: Markit

Cullen Roche

Cullen Roche

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Comments
  • michael schofield

    I’m more skeptial of China, I’m thinking that the Chinese Gov’t only tells us what they want us to hear. Are there any PragCap readers who know anything about the reliability of Chinese Gov’t data?

    09/22/2011 at 7:05 AM
  • Oroboros Oroboros

    When Fast Growing Economies Slow Down: International Evidence and Implications for China

    NBER Working Paper No. 16919
    Issued in March 2011

    Using international data starting in 1957, we construct a sample of cases where fast-growing economies slow down. The evidence suggests that rapidly growing economies slow down significantly, in the sense that the growth rate downshifts by at least 2 percentage points, when their per capita incomes reach around $17,000 US in year-2005 constant international prices, a level that China should achieve by or soon after 2015. Among our more provocative findings is that growth slowdowns are more likely in countries that maintain undervalued real exchange rates.

    http://www.nber.org/papers/w16919.pdf (no, not the actual pdf unfortunately)

    09/22/2011 at 9:34 AM
  • KB

    Well, another piece in the puzzle. The last one we need to see would be our PMI an ISMs reported in October.

    09/22/2011 at 12:40 PM