Surveys reveal China’s economy is growing, albeit slowly

Surveys of Chinese factory managers in June presented a mixed picture for the world’s second-largest economy, indicating steady growth but with limited acceleration.

The official purchasing managers index (PMI) from the China Federation of Logistics and Purchasing remained unchanged at 49.5 from May. On this scale, a reading above 50 signifies expansion. Zhao Qinghe, a senior statistician for the National Bureau of Statistics, told the official Xinhua News Agency, “China’s economy is maintaining expansion, but the momentum of recovery still needs to be consolidated.”

The PMI for new export orders fell slightly to 49.4 from 49.6, potentially reflecting the European Union and United States’ plans to raise tariffs on imports of electric vehicles from China.

A more optimistic picture was presented by a private-sector survey from the financial media group Caixin, which rose to 51.8 from 51.7 the previous month. This represented the fastest expansion of factory output in two years, defying analysts’ expectations of a decline. Despite positive sentiment, Caixin noted that confidence among purchasing managers hit its lowest point in over four-and-a-half years due to concerns about intense competition and uncertain market conditions.

The surveys offered little clarity on the impact of recent measures to stimulate the property sector, such as reducing mortgage interest rates and down payments, aimed at addressing a slump caused by a crackdown on excessive borrowing by developers.

“The PMIs for June were mixed but overall suggest that the recovery lost some momentum last month,” stated Capital Economics in a report.

The official PMI reading for high-tech manufacturing rose to 52.3 in June from 50.7 in May, highlighting the government’s push to boost investment in upgrading factories and equipment in new industries like computer chips and electric vehicles. Zhao commented, “This shows that the transformation and upgrading of China’s manufacturing industry has continued to advance.”

Chinese leader Xi Jinping has prioritized the growth of advanced industries, a focus expected to dominate an upcoming meeting of top Communist Party officials later in the month. Xinhua reported that during this meeting, the party would announce a new round of “deep and comprehensive reforms” to “chart the course forward for the world’s second largest economy.”