China’s manufacturing sector grew slowly in November, indicating a sluggish momentum of growth in the world’s second-largest economy.
The economic slowdown has added seer pressure on the government and the regulating authorities to ramp up the stimulus packages after an unexpected cut in the interest rates in November.
The People’s Bank of China (PBOC), which had long denied the need for any big economic stimulus packages for China, surprised the financial markets by cutting down the key rates on November 21 in a bid to shore up growth.
According to the financial analysts, China is amidst a tough phase and many similar economic moves are expected to come in the coming months, in case the economy continues to stumble.
Writing for research note, Australia and New Zealand Banking Group Limited (ANZ) made following observations: “The PBOC’s rate cut appears to have failed to improve sentiment, and we see little improvement in activity indicators in November. In order to maintain growth for the whole year at around 7.5 percent (the official target), we believe that Chinese authorities will intensify easing efforts in December to accelerate growth momentum.”
The National Bureau of Statistics, released on Monday, said that the official Purchasing Managers’ Index (PMI) of China eased to an eight-month low of 50.3 in November. The easing PMI indicates activity expanding modestly but below forecasts for November’s 50.6 and October’s 50.8.
The official PMI survey, which is said to be biased toward state-owned factories, showed strengthening demand for Chinese goods in the domestic market than abroad, which finally resulted in the contraction of new export orders.
The economists expect economic growth of China to cool further to roughly 7.1 percent next year.
Meanwhile, the sources close to China’s policy-making said that the regulators are well-prepared to lower key rates again as well as ease the lending curbs on rising concerns of a spike in bad loans amid falling prices, business failures and job losses.