In April, China's manufacturing sector saw a slower expansion, according to an official survey released on Tuesday. The National Bureau of Statistics reported a drop in the Purchasing Managers' Index (PMI) to 50.4 from March's 50.8, remaining above the 50-mark denoting growth but slightly below the Reuters poll's forecast of 50.3.
While first quarter GDP growth was solid, indicating some easing of pressure to implement immediate stimulus measures, challenges persist. New export orders grew at a slower pace, and employment continued to decline, as per the NBS PMI data. However, a separate Caixin survey showed faster growth in manufacturing activity, buoyed by increased new export orders.
Expectations for additional stimulus from Chinese authorities remain high, particularly as external demand, including from the U.S. and other developed economies, shows no signs of significant improvement. Trade tensions persist, with accusations of China exporting industrial overcapacity. Amid these challenges, there's an emphasis on economic development through innovation in advanced sectors.
However, immediate concerns revolve around a prolonged property downturn and mounting local government debt, which have negatively impacted household and investor confidence. Despite stronger-than-expected first quarter GDP growth, weaknesses in areas like retail sales, industrial profits, and property investment highlight the difficulty in stimulating broad demand.
China has set a GDP growth target of around 5.0% for 2024, a goal viewed by analysts as ambitious given the prevailing economic circumstances.
Paraphrasing text from "Investing" all rights reserved by the original author.
