China’s economic recovery is surprisingly slowing. The purchasing managers’ index fell for the second consecutive month and the services producer index is also weakening. That’s according to data released today by the Chinese statistics bureau. After the US, the world’s second largest economy is thus recovering from the Covid-19 pandemic more slowly than many expected.
Factors Contributing to China ‘s Slowing Economic Recovery
The official manufacturing purchasing managers’ index (PMI) fell to 48.8 from 49.2. A reading below 50 points indicates an economic downturn. The service sector index, while remaining in the growth range, also fell to 54.5 from 56.4 points, according to the statistics office. Both readings, which indicate the health of the Chinese economy, thus fell short of experts’ expectations.
The reasons for the slowdown in the Chinese economy in the second quarter are varied. Export growth has deteriorated. The recovery of the battered property market is also weaker. The government has also slowed infrastructure spending. Companies are suffering from falling profits and rising political tensions with the United States and its allies.
Impact of the Slowdown
In Singapore, the momentum of the economic recovery continues to slow, according to analyst Ho Woei Chen of United Overseas Bank. “Given weak domestic inflation, there will be pressure to step up monetary policy support,” Bloomberg quoted him as saying.
The Chinese government has vowed to achieve economic growth this year after the end of its tight coronary policy. In the first quarter, gross domestic product (GDP) growth was 4.5 percent year-on-year. The country’s leadership has set a growth target of “around five per cent” for the full year.
Source: ČTK
