China’s pressures intensify

h/t WSJ

The HSBC China flash PMI was out this afternoon. According to the SMH:

HSBC’s China Flash PMI for July dropped by its fastest pace since March 2009 and pointed to a monthly contraction in the country’s vast manufacturing sector for the first time in 12 months, the purchasing managers’ survey shows, while a price sub-index signalled rebounding inflation.

The flash purchasing managers’ index (PMI), the earliest available indicator of China’s industrial activity, dipped to a 28-month low of 48.9 in July and fell below the 50-point level for the first time since July 2010, as policy tightening and slack global demand weighed on economic growth.

That compares with the final reading of 50.1 in the HSBC PMI for June. The 50-point level in the PMI demarcates expansion from contraction, with a reading above 50 indicating growth.

According to the final PMI reading in June, the industrial output sub-index fell to 49.8, indicating a contraction for the first time since July 2010. That trend has now been confirmed with the overall July Flash PMI reading.

Hmmm, production down and prices up. Also, from Bloomberg via Zero Hedge, below find an inventory of Chinese food inflation:

Comments

    • So growth is now virtually entirely investment-driven.

      Its been that way for some time now. In 2009, 92.3% of China’s growth came from investment.

      BEIJING, Feb. 2 (Xinhua) — Investment accounted for 92.3 percent of China’s Gross Domestic Product (GDP) growth in 2009, National Bureau of Statistics (NBS) announced Tuesday.

      Of the GDP growth of 8.7 percent last year, investment growth contributed 8 percentage points, said a statement on the NBS website.

  1. It’s time for more government stimulus, ZIRP, QE3, FHOG, cash for clunkers etc. Wash, rinse, repeat.

  2. H&H

    China does what ‘experts’ say and dampens growth – disaster GDP had declined. China doesn’t – disaster GDP continues higher. China takes measures to reduce inflation (on many levels its number 1 problem, forget the debt for a moment – which could be resolved in the stroke of a pen) disaster, inflation continues higher, disaster. What can this country do. Do that satisfies the multitude of critics. Nothing it would seem, a move either way – disaster.

    There is a ‘will’ for a China collapse, subliminal, strategic, personal, raced-based – I’m not sure…but it’s there.

    On on this point I am sure I am right – there is not the same sentiment expressed toward any other country. Why?

    On Lorax’s playlist, I’m sure (on my 13 year olds):
    http://www.youtube.com/watch?v=-XixWePunws

    • Nonsense Fanboy. Yet again you distort the truth.

      What the experts want is for China rebalance away from investment and towards consumption, put more money in Chinese consumers pockets and stop favouring SOEs, pay a decent interest rate on deposits, and allow the Yuan to move to a level that reflects its true value.

      You don’t like any of this because it means slowing the Chinese investment monster that is feeding the commodities bubble and Australia’s mining boom.

  3. Is this a quiet news day?

    The chart accompanying the article doesn’t give any indication of alarm. In fact it looks like a seasonal decline but given only 2.5 years of day is shown it is hard to conclude. Also contrary to “HSBC’s China Flash PMI for July dropped by its fastest pace since March 2009 and pointed to a monthly contraction in the country’s vast manufacturing sector for the first time in 12 months” the drop appeared to be much steeper in 2010.

    Nothing to see here. move along…