- Qu Hongbin, HSBC's chief economist
Growth in China's manufacturing sector weakened in August, suggesting the recovery in the world's second biggest economy is losing steam and Beijing may need to take more steps to stabilize the economy. The HSBC-Markit Economics flash PMI gauge slid to 50.3 in August from last month's final reading of 51.7, when the index was at the highest level in 18 months. Following the release of data stocks in China declined, the Australian Dollar weakened and the Yuan dropped the most since June. The Yuan extended its loses to 6.1513 per U.S. Dollar, the biggest fall since June 16.
China's economy has been struggling to stabilize after slowing from double-digit rates of expansion in the past decade. Growth edged higher to 7.5% in the April-June quarter from 7.4% in the first three month period. The HSBC report adds to other recent data that the recovery of the world's number two economy is still fragile. Earlier this month, data showed that China's exports accelerated but imports declined, which may reflect weakening domestic demand. Economists project China's gross domestic product will increase 7.4%, marking the weakest expansion since 1990. Faltering growth in China could have knock-on effects throughout the global economy, as businesses depend on continuing Chinese growth to bolster demand worldwide.
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