China Manufacturing Collapses

In the "go fast, go slow" Chinese economy, data show that the recent "go slow" period will extend itself. The HSBC/Markit PMI flash for China was 49.2, against a figure of 50.7 in the previous month. The number was an 11 month low. The demarcation between expansion and contraction is 50.

The International Monetary Fund recently forecast that China's growth would slow to 6.9% next year, well off the torrid pace set for over a decade. Even that downward revision is in trouble, as more signs appear of cracks in the Chinese economy. Manufacturing may have slowed so much because of trouble with economies in the European Union and Japan. The U.S. economy may be large, but cannot carry China on its shoulders.

Commenting on the Flash China Manufacturing PMI survey, Annabel Fiddes, Economist at Markit said:

The HSBC Flash China Manufacturing PMI signalled a slight deterioration in the health of China’s manufacturing sector in March. A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers. Meanwhile, manufacturing companies continued to benefit from falling input costs, stemming from the recent global oil price decline. However, relatively muted client demand has led firms to pass on savings in a bid to boost new work, and cut their selling prices at a similarly sharp rate