China Manufacturing Grows at Slower Pace as Recovery Falters “The government needs to help translate the easy liquidity conditions into real growth.”

April 23, 2013 Leave a comment

China Manufacturing Grows at Slower Pace as Recovery Falters

By Bloomberg News – Apr 22, 2013

China’s manufacturing is expanding at a slower pace this month, fueling concern that the world’s second-biggest economy is faltering.

The preliminary reading of 50.5 for a Purchasing Managers’ Index (EC11CHPM) released by HSBC Holdings Plc and Markit Economics compared with a final 51.6 for March. The number was also below the median 51.5 estimate in a Bloomberg News survey of 11 analysts. A reading above 50 indicates expansion.

China’s stocks slumped as the data added to an unexpected slowdown in economic growth, reported last week, that prompted banks including Goldman Sachs Group Inc. to cut full-year forecasts. In Washington, central bank Governor Zhou Xiaochuan said April 20 that a 7.7 percent first-quarter expansion was reasonable and “normal,” highlighting reduced expectations after 10 percent-plus rates during the past decade.

“This paints a picture of a continued painfully slow recovery for China’s manufacturing sector,” said Yao Wei, China economist at Societe Generale SA in Hong Kong. “The government needs to help translate the easy liquidity conditions into real growth.”President Xi Jinping’s officials are grappling with constraints on export demand, property-market overheating, the risks associated with a surge in so-called shadow banking, and weakness in consumption because of a campaign to rein in official perks such as spending on banquets.

The Shanghai Composite Index fell 1.5 percent as of 10:24 a.m. local time.

Flu, Earthquake

First-quarter growth slipped from a 7.9 percent annual pace in the final three months of last year, with bird flu in Shanghai and Zhejiang and an earthquake in Sichuan now adding to the challenges for officials.

“This has been a very narrowly based recovery, predominantly driven by infrastructure investment, but now even infrastructure investment is also apparently slowing down,” said Tao Dong, head of Asia economics excluding Japan at Credit Suisse Group AG in Hong Kong.

Goldman Sachs, Royal Bank of Scotland Plc and JPMorgan Chase & Co. last week cut estimates for 2013 expansion to 7.8 percent. That would be the same as 2012’s pace, which was the weakest in 13 years.

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net; Kevin Hamlin in Beijing atkhamlin@bloomberg.net

Filed under Macro Trends

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