China’s Manufacturing Activities Contract In December
For the first time two years, the manufacturing activities in China have come down.
The trade war has left a disturbing mark on China’s manufacturing activity in 2018. The manufacturing sector has softened along with a slowdown in the Chinese economy.
The Chinese PMI index has fallen in December to 49.4. It has just given up the crucial 50-point level that signifies a contraction in the economy, as stated by a survey by the National Bureau of Statistics on Monday. It is much lower than the expected levels of 49.9 for the month of December.
This is the weakest contraction since 2016 and more softening is expected for the year to come, say analysts.
The global supply chain has been disrupted by the trade war and it is left to the two countries to protect the interests of trade in all countries affected by the tariffs, for the year 2019.
The ceasefire that has temporarily put off further tariffs from the U.S. on Chinese goods is not going to last. Unless the two countries enter into a proper agreement, things look bleak for the two countries.
However, the non-manufacturing PMI is at 53.8, which is better than expected levels of 53.4 for the month of November.
The World Bank expects a slackening in Chinese growth to 6.2 percent for the year ahead. It will be the weakest expansion in 30 years.
With the entire globe watching figures about China’s developments, a softening in Chinese growth is a cause of concern to analysts.
The export and manufacturing sections have been performing well so far in China. It was only in 2018, that growth has slackened and analysts point to the trade war as the main cause for the decline.
The worst is yet to come says Frederic Neumann from HSBC’s Asian Economics Research. He feels that China is a gauge of the performance of the global industrial cycle.