- Erwin Sanft, head of China strategy at Macquarie.
Measures of China's manufacturing activity showed mixed results in January, with the official gauge falling further into negative territory, whereas the private reading strengthened. The government-compiled manufacturing purchasing managers' index dropped to 49.4 in January, down from 49.7 in December, marking the weakest result since 2012 and the sixth consecutive month in contraction territory. Sub-indexes measuring new orders, production and exports also declined, the statistics bureau reported. At the same time Caixin manufacturing PMI edged up last month, to 48.4 from 48.2 in December, but remained in contraction.
In the meantime, the service industry, which has been a bright spot in the Chinese economy, also weakened, with the official non-manufacturing PMI declining to 53.5 from 54.4 in December. China's government has been trying to re-orient the economy away from investment-fuelled industrial growth towards domestic consumption. Thus, services such as real estate and health care become important for policymakers, with the services sector already accounting for half of China's gross domestic product. Data released last month showed that world's second biggest economy expanding 6.9% in 2015, the weakest growth rate in 25 years. The weakness has continued despite the government's efforts to cushion the nation's economy.
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