China’s economy faces multiplying risks as shrinking factory activity points to deeper slowdown

The official manufacturing purchasing managers’ index (PMI) – a survey of sentiment among factory owners – fell to 49.6 in September, from 50.1 in August

The survey points signals more trouble for China’s economy, which has been hit by crippling power cuts, high raw material prices and fresh Delta outbreaks

Reading Time:3 minutes

Published: 6:55pm, 30 Sep 2021Updated: 11:23pm, 30 Sep 2021

China’s economy appears to have taken a turn for the worse as manufacturing activity among large firms slipped into contraction in September, sounding the alarm on a deepening slowdown amid a national electricity crunch, raw material inflation, regulatory crackdowns and fresh Delta variant outbreaks.

The official manufacturing purchasing managers’ index (PMI) – a survey of sentiment among factory owners – fell to 49.6 in September from 50.1 in August, according to the National Bureau of Statistics (NBS), marking a 19-month low.

“The weak PMI will send an alarm to the government,” Zhang Zhiwei, chief economist at Pinpoint Asset Management, said.

“Economic growth in the fourth quarter is likely to slow further without a change of government policies, and the pace of slowdown may pick up.”

“China is undergoing a slowdown that is predictable and within the policy framework

Zhou Hao

Widespread power cuts that have crippled businesses and hurt households have exacerbated the soft underlying economic conditions, according to analysts.