Daily Management Review

Factory Activity In China Hits 3-Year Low: Survey


Factory Activity In China Hits 3-Year Low: Survey
A survey showed that Chinese manufacturing activity touched a three year low amidst China fighting out a tough trade war with the United States and clear signs of its economy slowing down.
Following a survey conducted by the by the government statistics bureau and an industry group showed that there was a 0,3 point drop in the monthly purchasing managers' index to reached 49.2 on a 100-point scale. According to this index, economists consider activity to be contracting if the index is below 50. The latest index number is the lowest recorded for the Chinese economy since February 2016.
There are two factors that economists point to the contraction of factory activities – the first was because of the tariffs put on Chinese goods by US president Donald Trump as a part of the trade war between China and the US over issues related to Beijing’s trade practices and the second is a drop in domestic consumer demand as well as for Chinese products overseas.
During the last weekend, while Trump said that there has been some progress in trade talks with China, the chief negotiator of US, Trade Representative Robert Lighthizer, later indicated about some significant differences between the two parties.
"Much still needs to be done," Lighthizer said during an appearance before a U.S. House of Representatives panel. He talked about the demand of the US of the formation of a framework to enforce penalties on China if Beijing is not able to follow-on on any of the promises that it makes. 
According to economists, unless there is a final and formal settlement on trade, companies are unwilling to make investments and in taking any other form of long-term business decisions,
"Unless the trade war truly turns into an extended truce, the weakening trend may not end quickly," Irene Pang of ING said in a report.
Pang said that it would not be until the end of March that a US–China deal, if any at all, can be reached and therefore "another month or two of bad PMI data" are likely.
According to the National Bureau of Statistics and the Federation of Logistics & Purchasing, there was decline in measures of output and employment.
For the ruling Chinese Communist Party, the decline in the numbers of trade and manufacturing is being seen as one that would increase pressure on it to get a trade deal done with the US.
The Chinese economy had grown by 6.6 per cent last year which was a three decade low and the latest figures released shows signals that there can be further weakening of the economy.
There is pressure on China from the US to cancel plans to create global competitors in robotics and other technology sectors sponsored by the country. US, along with countries, like Japan and others in Europe claim that such trade and business policies are in violation of market-opening obligations of China.