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What’s going on in the world’s second largest economy? After the problems in the real estate sector, now there are surprising problems in the manufacturing sector. These include sectors such as automobile, glass, metal, wood, paper and textile production, mechanical engineering, as well as the chemical and food industries.
According to the statement made by the Beijing Bureau of Statistics, the manufacturing sector Purchasing Managers Index (PMI) decreased from 50.2 points to 49.5 points compared to the previous month. Not only did it fall short of forecasts: a reading below 50 means industrial activity is contracting. After five months of decline, the value rose above 50 again for the first time in September.
The PMI value of the non-manufacturing sector, which includes trade, health, IT, real estate and services, decreased from 51.7 to 50.6 points in September. This means growth continues. However, this year the value is at its lowest level. When the two PMI values are put together, they are at the worst level in decades, excluding the Corona period.
This development followed the better-than-expected 4.9 percent gross domestic product growth in the third quarter. This had raised hopes that the Chinese economy would get back on track after the recession of the pandemic.
China was punished in the stock market
It didn’t take long for the reactions to come. Hong Kong benchmark Hang Seng fell immediately today. Foreign investors are increasingly selling Chinese stocks. “South China Morning Post” quotes Yan Wang, chief China strategist at Alpine Macro, as saying: “The struggle in Chinese stocks reflects the country’s deep crisis of confidence.”
The government has set an economic growth target of 5 percent for 2023. This is the lowest official target in decades.
Switzerland was also affected
What does this mean for the Swiss economy? Christine Moser, a spokeswoman for Switzerland Global Enterprise, noted a return of interest from Swiss companies in China, but demand is still well below pre-Covid levels.
“The decline in the Chinese economy worries exporting companies,” he says. For example, Germany, one of the most important sales markets for Swiss companies (for example, suppliers in the automotive industry), is seriously affected by the slowdown in the Chinese economy.
Gérald Béroud, a China expert from French-speaking Switzerland, goes one step further. He recently said China was “no longer a priority” for Swiss companies.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
