A Dire Signal If Chinese Manufacturing Falls Into Contraction

Posted Thursday, September 1, 2022 by
Skerdian Meta • 1 min read

Manufacturing has been the driving force behind China’s explosive growth during the last few decades. Part of British manufacturing was transferred to China in the 60s and 70s, while later the US manufacturing has been slowly transferring to China. The transfer to renewable energy will add further to Chinese manufacturing. So, the expansion of this sector has been massive in China and we have often seen double-digit growth.

But, the situation is getting from bad to worse and this sector which has been leading the way for China is heading into contraction. China has been having economic trouble as lockdowns and restrictions continue and if this sector falls into a contraction then that would be the beginning of real trouble.

china caixin pmi manufacturing 01 September 2022

  • Markit Manufacturing PMI plunges into contraction
  • Manufacturing PMI fell to 49.5 in August (expected 50.2)
  • Caixin/Markit manufacturing PMI 49.5 points vs 50.2 expected
  • Prior 50.4 points points

Both China manufacturing PMIs are firmly in contraction. Headwinds include:

COVID outbreaks and associated restrictions
the deeply troubled contracting property sector
power shortages in southwestern China



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