- Dr. He Fan, Caixin chief economist
Business activity in China's manufacturing sector unexpectedly dropped to the lowest level in six-and-a-half years in August despite Beijing efforts to kick-start the economy. The preliminary Caixin China Manufacturing Purchasing Managers' Index plunged to a 77-month low in August of 47.1, compared with a final reading of 47.8 in July, according to Caixin Media Co. and research firm Markit. The data suggests the Chinese government may need to step up more stimulus to reach its goal for the year of about 7% economic growth. Sub-indexes of both new orders and new export orders decreased at a faster pace in August, and output and employment also fell more rapidly.
China's manufacturing sector has struggled over the last few years due to softer domestic and external demand. On the domestic front, the economy has slowed to a pace not seen for a few decades, with a slowdown in the property sector curtailing economic growth. Overseas demand has been weak as China's trading partners have struggled with weaker growth levels themselves, with the exception of the US. The Chinese economy is still heavily dependent on export demand despite the government's attempts to shift the world's second biggest economy towards a domestic-demand model and away from export-reliant growth.
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