- Qu Hongbin, Chief Economist for China at HSBC
China's factory activity declined to the lowest level in seven month in December, indicating a stagnant growth of the world's second biggest economy in the final quarter of the year. The actual data was not only disappointing but also unexpected, particularly after the interest rate cut last month, the first in more than two years, and the government's stimulus aimed at reviving a dull economy. A preliminary reading of the HSBC China Manufacturing Purchasing Managers' Index, an indicator of nationwide manufacturing activity, slid to 49.5 in December, below the 50 point threshold, indicating contraction in the sector's activity. The reading's sub–components including output, new orders, employment and stocks of purchases and finished goods all declined during the month, though new export orders rose. In November, the final HSBC manufacturing PMI came in at 50.0. The preliminary reading, which is usually released about one week prior to the final PMI data, was published more than two weeks before the final estimate for December due to year-end holidays. The final reading is scheduled for January 2.
Growth in the world's second biggest economy declined to 7.3% in the September quarter, the slowest pace since the global financial crisis. China's central bank expected growth could slow to 7.1% in 2015 from about 7.4% this year.
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