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This photo taken on June 27, 2024, shows workers working on producing sun protection clothing at a factory in Fuyang city, eastern China’s Anhui province.
Hong Kong
CNN
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Factory activities in China The private sector expanded at its fastest pace in three years, private data showed on Monday, suggesting strong demand for Chinese products at home and abroad.
That contrasts with the results of an official government survey released on Sunday which showed a contraction in major state-owned manufacturers and highlighted a still-uneven recovery in the world’s second-largest economy.
According to S&P Global, which compiled the survey, the Caixin Manufacturing Purchasing Managers’ Index (PMI) rose to 51.8 in June from 51.7 in May, not only beating market expectations but also marking the sixth consecutive month of improvement for the index.
However, the reading was at odds with the National Bureau of Statistics (NBS) PMI, which remained unchanged from May at 49.5, marking a second consecutive month of contraction.
The PMI is a monthly indicator of economic activity: a reading above 50 indicates expansion and a reading below 50 indicates contraction.
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An employee operates a machine at a semiconductor factory in Siyang County, Suqian City, Jiangsu Province, China on March 1, 2023.
Goldman Sachs analysts said on Monday that the “divergence” between Caixin and the official PMI has widened since May, likely due to differences in the sectors they cover.
Caixin’s survey covers more export-oriented and consumer-related companies, but the official PMI is biased towards manufacturers that produce industrial materials such as steel, cement and chemicals, which are more vulnerable to a slowdown in fixed-asset investment.
Analysts believe the current data reflects the current state of the economy, with exports and consumption strong but investment weak.
“Demand for consumer goods and intermediate goods was stronger than investment goods,” said Wang Jie, senior economist at Caixin Insight Group.
“Overall, manufacturing continued to improve in June, with supply, domestic demand and exports continuing to increase,” he added.
Customs data for June is not yet available, but May statistics show the country’s Exports rose 7.6 percent from a year earlier, beating analysts’ expectations.
However, manufacturers are less optimistic about the outlook as recent tariff announcements by the United States and the European Union have dampened sentiment among manufacturers.
“An index showing future production expectations fell more than three percentage points from the previous month, hitting the lowest since November 2019,” Wang said.
“Concerns expressed by surveyed companies [in the Caixin index] “It focused on significant downward pressure on the economy and intense market competition,” he added.
The EU announced last month it would impose additional tariffs of up to 38.1% on electric vehicles imported from China, citing Beijing’s unfair support for companies that are undercutting European carmakers.
The provisional tariffs will be applied until July 4 while the investigation continues, and the tariffs will be finalized on November 2 when the investigation concludes.
The EU’s decision comes a month after the United States quadrupled tariffs on Chinese-made electric vehicles from 25% to 100%, targeting American job and manufacturing growth.