Manufacturing activity still sluggish

China's manufacturing activity was on the verge of contraction in April, firming up policymakers' key task of stabilizing growth by new stimulus measures.

April's manufacturing Purchasing Managers' Index, released on Friday, remained unchanged from March, at 50.1, close to the 50-point level that separates expansion from contraction, compared with 49.9 in February and 49.8 in January.

The PMI readings for medium and small enterprises in April remained below 50, while that for large companies stood at 50.6, according to the National Bureau of Statistics.

The subindex for employment was 48 in April, a decline from 48.4 in March, indicating fewer job opportunities in the sector. Labor at manufacturing companies has contracted since June 2012, the NBS data showed.

The official statistics agency also said the PMI for the service sector was 53.4 in April, the lowest level since January 2014, indicating a slower expansion compared with 53.7 in March and 53.9 in February.

Employment in the service sector has contracted for three consecutive months, and decreased the quickest in April, a PMI subindex reading of 48.9 showed.

Zhao Qinghe, a senior economist at the NBS, said that the downward pressure for the manufacturing industry remained heavy, as both domestic and overseas market demand remained sluggish.

Stabilizing growth

A meeting of the Political Bureau of the Communist Party of China Central Committee on Thursday highlighted that attention should be paid to the current heavy economic downward pressure.

The country's top leadership stressed that investment retains a key role in stabilizing growth while potential consumption should be further tapped to foster new growth.

A statement after the meeting said that China needs to stick to its proactive fiscal policy, with increased public spending, and its prudent monetary policy, with a focus on guiding money flow to the real economy.

The leadership also approved guidelines for the coordinated development of the Beijing-Tianjin-Hebei region, which will transfer functions not essential to Beijing's status as the national capital from the city to neighboring areas and optimize its development.

Guan Qingyou, executive director of Minsheng Securities' research institute, said that China may see a new wave of infrastructure investment after the "4 trillion yuan stimulus package" in 2009. This time it will be guided by the blueprint of the "Belt and Road Initiative" and the Beijing-Tianjin-Hebei regional development plan.

"The growth rate of infrastructure investment should at least be 25 percent this year to achieve the 7 percent GDP growth target, which needs about 14 trillion yuan," said Guan. "Infrastructure investment will increase faster in the second quarter."

 

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