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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (5230)	8/1/2005 7:57:54 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China’s economy slowing down: surveys BEIJING: A pair of reports on Chinese manufacturing issued on Monday reinforced views that the economy is gradually cooling, but a top think-tank said last month’s revaluation would have only a modest impact on growth prospects. Hong Kong-based brokerage CLSA said its purchasing managers’ index for China rose to 51.5 in July from 51.0 in June. The increase, the first in four months, signalled a slightly stronger rate of improvement in China’s manufacturing sector, but it was still the third-weakest reading since the index was launched in April 2004. An index based on a separate survey of purchasing managers conducted for the National Bureau of Statistics painted a less rosy picture. The index fell for the fourth straight month in July, to 51.1 from 51.7 in June. However, both indexes remained above the 50 mark, indicating manufacturing expansion; a reading below 50 shows contraction. “Overall, we expect the upcoming growth moderation in the Chinese economy to be a gradual one,” Grace Ng of J.P. Morgan in Hong Kong said in a note to clients. China said the fall in its official PMI was due to a variety of factors, ranging from weaker export orders in July to power crunches that hit output. The industrial cooling seen in reports such as the PMI has yet to be reflected in China’s headline gross domestic product growth, which was an annual 9.5 percent for the second quarter, the eighth straight quarter of growth over 9 percent. “But because the PMI has the significance of being a leading indicator, the falling trend may presage the possibility that the economy will show a downward trend in the second half,” the report quoted index analyst Zhang Liqun as saying. Profits squeeze: The rise in the CLSA index mainly reflected stronger output and new orders. However, growth in both remained below the long-run average because of the oversupply of certain products, which has been weighing on company profits. Jim Walker, CLSA’s chief economist, said: “The margin squeeze in China shows no signs of letting up although, for domestic producers, the small revaluation of the renminbi will have had some relieving effect from late July onwards — assuming, of course, that the margin enhancement is not met with further output price falls.” China revalued the yuan, or renminbi, by 2.1 percent on July 21 and said its value would henceforth be managed with reference to a basket of currencies instead of being pegged to the dollar. The State Information Centre said in a report obtained by Reuters the revaluation would theoretically cut half a percentage point off GDP growth by the end of next year. But, because the yuan had been revalued at a time of cyclical strength, the overall economic impact would be less pronounced, said the group, a think-tank under China’s main economic policy body, the National Development and Reform Commission. “The cooling effect of the revaluation will be mild,” the report said. The think-tank expects consumer price inflation, which slowed to an annual rate of 1.6 percent in June, to fall by as much as 0.4 percent by the end of next year due to the revaluation. reuters dailytimes.com.pk