Differing survey results released on Chinese manufacturing, industry growth may not have slowed as much as expected

According to independent data released shortly after official figures, Chinese factory production did not slow as much as was thought this quarter.

According to official figures, the third quarter of this year saw 6.8% growth, a 0.1% drop from growth in the first two quarters.

This was in line with an expected slowdown as the country attempts to get a handle on corporate debt and curb pollution.

However, while these figures tend to focus on larger companies, the Caixin Purchasing Managers Index, which can often better indicate the state of small and medium sized companies, registered at 51.0 for October, with anything above 50 representing growth from the previous period.

However the official PMI, while still above 50, dropped by 0.2 from September, which had been the strongest in two years.

This was the weakest reading in three months.

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Julian Evans-Pritchard, Capital Economics China economist, started in the South China Morning Post that the Caixin index is more heavily relied upon since it “has recently done a better job capturing cyclical tends in economic activity.”

According to analyst Zhong Zhengsheng quoted in the SCMP, “The stringent production curbs imposed by the government to reduce pollution and relatively low inventory levels have added cost pressures on companies in midstream and downstream industries, which would have a negative impact on production in the coming months.”

Throughout October, rises were reported in both new business and new export sales. However manufacturing jobs have been cut and production expansion did not increase. The month also saw a significant fall in the price of raw materials.

Overall, the Caixin Survey indicated that demand for manufactured goods from China was decreasing both nationally and overseas, and export growth was at its weakest since December.


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