China`s Purchasing Managers Index fell for 3 consecutive months

CHINA Federation of Logistics and Purchasing (CFLP) recently released China`s purchasing mangers index (PMI) in July was 51.2 per cent, down 0.9 per cent from June`s figure. This is the third consecutive month that shows a downward trend. This indicates that the growth of China`s economy is slowing down because its manufacturing sector has been affected by the government policies aimed at cooling the overheating financing and real estate markets over the past few months.

Reuters reported that although China`s PMI in July was lower than June`s 52.1 per cent, the overall PMI has been over 51 per cent for 17 months in a row since March 2009. This suggests that the overall economy is still expanding.


Said an analyst from CFLP, PMI continued to fall in July, which indicated the pace of growth slowed down. Meanwhile, the index of new export orders was also down in July, which was an alert for shrinking growth of foreign trade in China. However, since both internal and external economic contexts are much better than the same period of 2009, it is forecast that the growth in both investment and exports will not significantly decrease.


The falling of China`s PMI is an effect of Chinese government`s macro-economic control in relation to new real estate policies and new tax return rate for exports, according to analysts at Hangyuan securities, a leading public securities firm in China.


It is expected that such negative effects will start to fade out in August and September. The PMI will hopefully go up steadily then, added the report.