China outlook dims as export orders fall, PMI shows

The mainland's economic recovery showed more signs of sputtering yesterday, with a private survey of manufacturers showing a sharp fall in export orders and the industry ministry warning against expectations of vigorous growth.

The HSBC flash manufacturing purchasing managers index (PMI) for China fell to a two-month low of 50.5 in April, compared with the final reading of 51.6 in March, HSBC and Markit said yesterday.

For the first time since December, the index for export orders fell below 50. A reading above 50 indicates expansion and one below, contraction.

The new PMI readings suggest "a stabilisation in growth in coming quarters, rather than a strong growth recovery", Barclays Capital economists said in a research note.

Meanwhile, Xiao Chunquan, a spokesman for the Ministry of Industry and Information Technology, warned of "great difficulties for the economy to maintain a stable growth".

He cited "a lack of effective demand, companies' reluctance to invest, serious problems with excess capacity, and a difficult operating environment for small and micro-sized companies".

Falling profitability had curbed companies' willingness to expand, Xiao said.