Activity in China’s manufacturing sector expanded for the second month in a row last month, but only marginally, an official survey showed yesterday, raising doubts about the sustainability of a recent pick-up in the economy.
The official purchasing managers’ index (PMI) was 50.1 last month, easing from March’s 50.2 and barely above the 50-point mark that separates expansion in activity from contraction.
Analysts polled by Reuters had predicted the reading would improve to 50.4, after upbeat March data fueled hopes that the country’s prolonged economic slowdown was easing.
The findings were “a little bit disappointing,” Zhou Hao (周浩), senior emerging market economist at Commerzbank in Singapore, wrote in a note.
“To some extent, this hints that recent China enthusiasm has been a bit overpriced and the data improvement in March is short-lived.”
While production expanded modestly — 52.2 — and at nearly the same pace as in March, growth in domestic and export orders faded slightly, though remaining in positive territory.
In a sign of caution over the outlook, factories continued to draw down heavily on inventories of finished goods.
Factories also appeared to be stockpiling less raw materials, possibly due to recent skyrocketing price increases for products such as steel, which have been linked in part to a recovery in the property market.
Indeed, South Korea reported last month that demand from China was the worst in three months, with exports to its biggest market tumbling 18.4 percent year-on-year.
And China’s factories continued to shed workers, with staff cuts quickening from the previous month.
The official PMI survey, which tends to focus on larger, state firms, has shown persistent declines in employment for the last three-and-a-half years.
March data had spurred hopes that the long-suffering manufacturing sector was bottoming out, with growth in industrial output and profits improving.
That, in turn, had led economists to wonder if the government and central bank would begin to take a less aggressive policy approach after a more than one-year long blitz of fiscal, monetary and administrative stimulus measures.
To be sure, the property recovery appears to have spurred demand for building materials from cement and glass to steel, and a recent rebound in commodity prices is bringing in more cashflow for some companies to service their mountains of debt.
However, home sales are now tumbling in some big cities, such as Shanghai, as authorities try to curb rapid price rises, and sizzling steel and iron ore markets cooled last week after China’s securities regulator ordered commodity futures exchanges to control speculative trading.
Analysts also worry that recent signs of improvement might be largely driven by companies and local governments taking on more debt, putting the chances of a stable recovery at risk.
China’s “big five” banks last week reported that their bad loans had increased by 53.2 billion yuan (US$8.21 billion) in the first quarter.
Meanwhile, activity in China’s services industry remained strong, but grew at a slightly slower pace, with the official reading at 53.5 last month, compared with 53.8 in March.
Beijing is banking on a stronger services sector to help offset the long slump in “old economy” sectors such as heavy industry and to provide jobs for laid-off factory workers.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last