As a fresh round of tariffs hit Chinese goods this week, the country’s economy is showing signs of resilience that could help counteract the effects of the US administration’s intensifying trade war against Beijing.
Activity in China’s manufacturing sector rebounded to a five-month high in August, data showed on Monday, a result of stimulus measures that China’s leadership hopes will offset the impact of a series of tariffs imposed by Washington, including new levies of 15 per cent on $112bn of goods from China that took effect on Sunday.
The latest Caixin China General Manufacturing PMI hit 50.4 during the month, compared with 49.9 in July. That is the highest reading for the index since March, as well as the first time in three months that it has risen above the 50 mark, which separates expansion and contraction in the country’s manufacturing industry.
The August reading, which was bolstered by recent stimulus measures such as infrastructure spending, was also higher than the figure of 49.8 forecast by economists polled by Reuters.
Analysts have taken the PMI reading as positive news but many expect the government will be forced to step up monetary easing to allow more credit to flow into the economy, buoying companies that are struggling to access loans from banks.
“Given growth appears to be tracking near the lower end of the policy target range and external pressures are intensifying (given another round of US tariffs), we expect policy to ease further on the margin,” analysts at Goldman Sachs said in a note to investors.
The latest round of US tariffs were aimed at so-called final goods, such as shoes and clothing manufactured in China, and expected to hit not only Chinese producers but also US consumers that rely on cheap goods from the world’s second-largest economy.
China has responded to the US measures, triggering additional tariffs on US goods including crude oil, leaving no end in sight for the trade dispute that erupted more than a year ago.
“China’s economy showed signs of a short-term recovery, but downward pressure remains a long-term problem,” said Dr Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group. “Amid unstable Sino-American relations, China needs to step up countercyclical policies.”
The good news reflected in the PMI numbers could be fleeting without a substantial policy response from China’s leaders, economists warned.
“Clouds are still hanging over the outlook — global demand looks set to weaken further and a long-overdue pullback in property construction is getting under way,” said Julian Evans-Pritchard, an economist at Capital Economics, noting he expected Beijing to unveil further stimulus measures over the coming months.
The PMI showed that the outlook for Chinese manufacturers toward the coming 12 months was close to its lowest since the Caixin series began. Manufacturers’ export orders also fell to their weakest point this year amid fears over the impact of trade friction and a cooling global economy.
Mr Evans-Pritchard added: “The fiscal support currently in the pipeline is unlikely to fully offset these headwinds and we think authorities will have little choice but to roll out further policy-easing measures in the coming months.”
- Click here for latest Laptop Computer Deals as low as $USD100.
- Outsource your Digital Marketing Team Offshore and save thousands of dollars.
- Looking to buy items online with prices 40% lower than amazon and ebay? Click Here.
This News is syndicated from this Source link.