China's Purchasing Managers Index Makes Slight Recovery
Created: 2012-10-02 09:29 EST
The China National Bureau of Statistics and Federation of Logistics & Purchasing have announced that China’s Purchasing Managers Index, or PMI, was 49.8 percent in September. It’s the first rebound since May. A manufacturing PMI higher than 50 percent indicates an economic increase; lower than 50 percent means it’s a slowdown.
On October 1, China’s state-run Xinhua News Agency reported that China’s manufacturing sector PMI was 49.8 percent, 0.6 percent higher than the previous month.
However, HSBC Holdings announced that China’s manufacturing sector PMI was 47.9 percent, which was the same as before, and lower than the official number.
The Wall Street Journal says the official number was higher than HSBC’s number because it focuses more on large-scale state-owned enterprises. And these enterprises are less affected by the current economic slowdown. HSBC focuses more on private exporters.
University of South Carolina, Aiken business professor Frank Xie is weary of the news.
[Prof. Frank Xie, University of South Carolina, Aiken Business School]:
“The CCP’s PMI number, like its other numbers, are not true to a certain extent. Errors in the statistics and the intention to create an appearance of economic recovery might have all led to this figure. It is not surprising. We cannot trust the CCP’s number."
In addition, the Senior Director of Standard & Poor's APAC Sovereign Ratings, Kim Eng Tan, says China's economy will have the most serious slowdown in the fourth quarter. He also predicts that China's economy won’t have a strong rebound, but its domestic demand will improve after the fourth quarter. And others agree.
[Qu Hongbin, Chief Economist, HSBC China]:
"China's manufacturing growth may be bottoming out.”
Economist Mao Yushi says the root cause of China’s economic hurdles are new investment projects that are now completed and aren’t making money.
[Mao Yushi, Economist]:
“In addition, the problems in the European Union are not resolved yet, so our exports have been on the decline. There is no significant change in the domestic financial sector. Monopoly industries still have high profits, and private enterprises operate with difficulties. These circumstances have not improved. It is not possible for the Chinese economy to rebound. Personally, I do not see a reason for it to pick up.”