China's Manufacturing Slows in June

July 1, 2010
Blistering economic growth recorded in the first three months of the year is moderating.

Suggesting that government efforts to cool the fast-growing economy are working, manufacturing activity in China slowed in June, official and independent surveys showed on July 1. The HSBC China Manufacturing PMI, or purchasing managers' index, fell to 50.4 last month from 52.7 in May, the bank said.

"The moderation in the manufacturing PMI implies slower sequential growth in China's manufacturing sector, partly due to the tightening measures taking effect," said HSBC chief China economist Qu Hongbin. "But fears about hard-landing are overplayed."

A separate survey released by a government agency on July 1 showed manufacturing activity slowed to 52.1 in June from 53.9 in May.

Royal Bank of Canada senior analyst Brian Jackson said the data showed blistering economic growth recorded in the first three months of the year was "clearly moderating."

"As the initial boost from last year's stimulus package starts to fade, it is inevitable that growth will ease in the second half of this year," Jackson said. "Policy tightening put in place in recent months also is starting to have an impact on activity."

China's economy grew 11.9% in the first quarter of 2010, fueling fears of overheating in the world's third-largest economy.

Worried an explosion in bad debts could derail the economic boom, Beijing has announced a series of measures to rein in bank lending and speculative property investment to avoid a damaging real estate bubble.

Premier Wen Jiabao said this week the economy was "developing in the expected direction," suggesting recent tightening measures would remain in place despite signs of a slowdown.

Copyright Agence France-Presse, 2010

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