Sun, Dec 04, 2011 - Page 11 News List

China’s non-manufacturing industries contract


China’s non-manufacturing industries contracted last month after the government’s curbs on property and lending damped demand.

A purchasing managers’ index for last month fell to 49.7 from 57.7 the previous month, the China Federation of Logistics and Purchasing said on its Web site yesterday.

A reading above 50 indicates expansion. The gauge covers industries including construction, retail and property.

China’s central bank reduced lenders’ reserve requirements on Wednesday for the first time since 2008, ahead of a report that showed manufacturing contracted for the first time in almost three years.

Premier Wen Jiabao (溫家寶) has pledged to “fine-tune” economic policies to sustain growth amid a deepening debt crisis in Europe that threatens to trigger a global recession.

“Investment in infrastructure and real estate is playing a smaller role in driving the economy,” China Federation of Logistics and Purchasing vice chairman Cai Jin (蔡瑾) said in yesterday’s statement.

A new orders index for construction industries fell to 47.6, yesterday’s data show.

Poly Real Estate Group Co, China’s second-largest developer by market value, said on Nov. 7 that its contracted sales in October fell 39 percent from a year earlier to 5.42 billion yuan (US$856 million).

The federation’s gauge drops “sharply” in November every year and during the Chinese New Year holiday, indicating seasonal adjustments aren’t being made appropriately, Hong Kong-based Bank of America Corp economist Lu Ting (陸挺) said in a note last month.

Growth in China is slowing as government curbs cool the property market and Europe’s crisis cuts demand for exports.

A manufacturing index released this week by the federation fell to 49.0 last month from 50.4 in October, the first contraction since February 2009.

A separate PMI released by HSBC Holdings PLC and Markit Economics declined to 47.7, the lowest level since March 2009.

The People’s Bank of China said on Wednesday it would reduce lenders’ reserve requirements by 50 basis points effective tomorrow, a move that may add 350 billion yuan to the financial system, according to UBS AG.

The cut signals China is at the beginning of monetary easing, Hong Kong-based HSBC economist Qu Hongbin (屈宏斌) said.

The central bank raised reserve requirements nine times to a record 21.5 percent for the biggest lenders, to rein in a credit boom that led to surging consumer and asset prices.

The tightening contributed to a credit squeeze among smaller companies and a surge in lending in the informal market.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top