China appears to be running out of steam, weighed down by the financial crisis in Europe and a sluggish US economy.
A survey released Wednesday by HSBC bank showed that China’s manufacturing sector shrank sharply in November in the biggest fall for nearly three years. The preliminary HSBC China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, fell sharply to 48 in November compared with a final reading of 51 in October. A figure below 50 indicates contraction.
The survey reading only confirms what everyone had expected. If American and European consumers are not spending the way they once did, it is not surprising that the Chinese factories feeding their appetites have slowed their production lines.
Washington has been desperately pressing Beijing to boost domestic Chinese consumption and to rely less on exports; that would give other countries a chance to sell more products into China and export their own way to growth, in a more balanced global economy.
But Beijing does not seem to care. According to their own words, “an unbalanced recovery would be better than a balanced recession.” The chinese also warned the world that “the one thing we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic.”
Were they pre-announcing their economy’s hard landing? It remains to be seen.
For an economy that has largely powered its recent growth by selling more and more to the rest of the world, a chronic global recession would be the worst possible news. And bad news coming in to China is now coming back out just as bad.