5 months ago • 2 mins
What’s going on here?
An official gauge of manufacturing activity in China started healing in September, but the country’s recovery is far from guaranteed.
What does this mean?
China's official purchasing managers index (PMI) shows how the country’s manufacturing sector is doing. And last month could’ve been a lot worse: the reading ticked up to 50.2 in September from 49.7 in August, crossing the crucial 50-mark that indicates danger. But a private report from Chinese media group Caixin and financial analytics firm S&P Global cast doubt on the idea that this could be the start of a long-awaited recovery, saying the country’s job and export markets are still far off the mark.
Why should I care?
For markets: It’s party time.
The country’s sluggish state isn’t a result of lack of trying, mind you. China’s been digging into its bag of tricks in a bid to give its economy a giddy up, pulling out aces like cutting interest rates and making it easier for banks to lend cash. And with China celebrating its Golden Week holiday, any hint that folks are splurging on treats and meals would be an encouraging sign for the economy. Either way, though, the country’s battered and bruised property market will need to dust itself off before China can really get back into its groove.
The bigger picture: 99 problems and China sure is one.
China’s slowdown is a problem for the whole of Asia and, in turn, the global economy. Usually a powerhouse, the country’s turning more inward to focus on supporting domestic spending and services. And wary of the potential ripple effects, the World Bank trimmed its expectations for China's growth next year and issued a warning for developing economies in East Asia. Given China’s slump, rising debt, and trade issues with the US, the bank downgraded its prediction for the region’s growth next year to 4.5%, down from the 4.8% it noted in April.
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