China’s Manufacturing In December Remains In Contraction, Barely Above 3 Year Low

china manLatest economic data from China shows that China’s manufacturing sector continues to remain in contraction and weaken in December for the fifth consecutive month as the world’s second largest economy undergoes a so called rebalancing that includes weaning itself from outside investment and shifting to a more consumer driven and service based economy.

China’s National Bureau of Statistics reported that December PMI was 49.7, barely above 49.6 in November, a 3 year low, which comes after Beijing has already made 6 interest rate cuts in 2015 to help offset the slowing Chinese economy.

A PMI reading below 50 designates contraction.

There was some good news in the latest PMI report.

Production rose to 52.2 in December from 51.9 in November and new orders rose to 50.2 from 49.8 in November.

Overall China’s economy is slowing with an annual growth rate in the third quarter of 2015 falling to below 7.0 percent at 6.9 percent.

China’s leaders, including China President Xi Jinxing, have minimized China’s economic growing pains.

Some analysts continue to question the validity of official GDP figures from Beijing’s economic ministries.

In 2007 China’s GDP reached 14.2 percent.

China’s GDP hasn’t dipped below 7 percent since 1990 when it dropped to 3.9 percent.

In 2014 China’s GDP was 7.3 percent.

China’s 4th quarter and yearly 2015 GDP report won’t be released until January 19th.

Goldman Sachs forecasts 6.4 percent GDP growth for China in 2016.

-Johnathan Schweitzer




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