Across The Border | China’s credit tightening is slowing economic growth but for how long?
The economy faces a turning point as Bejing puts “deleveraging” ahead of immediate growth. More downward pressures are ahead as the impact brought by rising funding costs takes effect, economists say
The numbers are showing. A gloomier outlook is on the horizon in China and economists have agreed.
Slowing growths in the service and manufacturing sectors in April have not only quashed expectations that the strong growth in the first quarter will continue, but they are also signs that Beijing’s efforts to tighten monetary policies and strengthen regulation to curb asset bubbles since late 2016 are taking effect, say economists.
The Caixin China General Services Business Activity Index (headline services PMI) - an unofficial gauge of the service sector - released on Thursday, hit an 11-month low in April, underscoring the pressure facing the sector.
The index fell to 51.5 in April from 52.2 in March, the lowest reading since May 2016. Most of the sub-indices, including the employment sub-index declined, except the new business sub-index, which rose to 53.0 in April from 52.2 in March.
Readings above 50 signal an expansion in activity, while the opposite indicates a contraction.
The Caixin Manufacturing Purchasing Managers’ index (PMI) fell to 50.3 in April, the record weakest in seven months since September, missing economist forecasts’ of 51.0 and a significant decline from 51.2 in March.