"The sharp slowdown in the industrial sector reflects more long-term problems, especially the prolonged weak internal demand."
- BNP Paribas
Activity in the manufacturing sector of China, the second-largest economy in the world, continues to expand; however, the pace of rise remains uncertain, as it balances between advance and decline for a long period of time. The benchmark Purchasing Managers' Index remained at 51.1 points last month, keeping the same pace of advance from August. Analysts, in turn, predicted a minor decline of the indicator. Despite the PMI Index being above 50 points, which divides rise from deterioration, the vast majority of economists underline worsening economic conditions in China. Besides slow-growing manufacturing, industrial profits fall, while output of factories hit the lowest pace of increase in five years, meaning that the country will have to reorient its economy from manufacturing to other industries in order to keep climbing in the future. Economy is expected to add 7.5% this year, according to median forecasts. As more serious issues become even more inevitable, the government of China is taking further steps to heat up local economy. For the time being, authorities denied adding up more monetary stimulus, but instead of that they eased some mortgage policies to help the housing market, which is experiencing tough times. Moreover, experts continue pointing on necessity to support internal demand in China, as exports industry is approaching its highest potential due to subdued recovery in the Eurozone and uncertainty over economic perspectives in Japan.
© Dukascopy Bank SA