3 Straight Months Shrinkage Puts Chinese Economy Down

The factory production is seeing a slowdown and decline for the third month running in China. This has raised the fears about the global demand.  

Cause of Concern

There is a significant slowdown in the manufacturing sector in China during the end of the year. This has raised concerns globally and it is felt that this could have a severe impact on the prices of commodities globally. There is also a chance for the British industry to suffer heavy damages due to decline in the production of the Chinese manufacturing sector. The manufacturing sector has seen an unexpected decline for the third straight month in October this year and this is not a good sign at all. The service sector looks to have picked up pace, but in a slow manner after the 2008 financial crisis.

Growth Target Could Be Missed

The latest figures indicate that China is all set to miss its 7% growth target that has been set up by the Government. The growth, in all likelihood, will not rise above the 6.9% annual growth rate seen at the end of the third quarter of this year. The growth rate can only be increased if there is a substantial rebound and this looks quite far as of now. As discussed in a previous article, China is Not Game for a Federal Rate Hike, because of its struggling economy, it looks like there is no hope at the end of the tunnel for China to increase its manufacturing sector output by the end of this year.

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Forecast of Volatile Currencies

The UK business chiefs are predicting that there is every chance for currencies getting volatile and also changes in the commodity pricing. This is going to affect their businesses very badly. About 28% of the businesses are feeling that the slowdown is a sure possibility of the emerging markets and this will be a very big threat to businesses.

The commodity prices are at its lowest since 2001 and it could further take a hit if you take a look at the present Chinese data as an investor. The economic melancholy that the country is facing at the moment has caused a severe dent in the prospects of many of the leading metal and oil producers of the world.

What Latest Chinese PMI Suggests?

If you take a look at the latest Chinese PMI figures put up by the National Bureau of Statistics, you will find that there is no end to this economic crisis in the near future. The manufacturing sector is one of the main reasons for this as it has recorded a reading of lesser than 49.8 that is below the 50 mark. There were expectations of the markets that there would be a rebound set at 50.

The services sector has covered up some of the disappointment of the factory production sector and has seen its slowest growth for seven years. China has been cutting down the lending requirements in order to boost its failing economy and to cut off the deflation. The new figures indicate that China will need to take few more measures to stop this crisis from getting over the head.


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