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People's Daily Online>>China Business

Manufacturing expected to still contract in Dec

By Chen Jia (China Daily)

10:11, December 16, 2011

BEIJING - China's manufacturing sector is expected to maintain its contraction in December, according to the reading of the preliminary HSBC Purchasing Managers' Index (PMI), which came in at 49 on Thursday.

The contraction may prompt the government to alter its policies to those more oriented towards growth.

The estimated PMI is 1.3 points higher than HSBC's final November index of 47.7, which was the sharpest fall since March 2009, indicating that the manufacturing sector is shrinking at a slower rate than previously. A reading below 50 means contraction, while one higher than 50 indicates expansion.

HSBC's PMI figure was lower than 50 in each month between July and September, before rebounding to 51 in October, indicating that economic growth is slowing.

"Although the pace of the slowdown stabilized in December, the manufacturing sector remains weak, with additional downside risks," said Qu Hongbin, chief China economist and co-head of Asian Economic Research at HSBC Group.

Qu said that a rapid decline in exports and the cooling property market were the main forces dragging on the world's second-largest economy. He also predicted that the downward trend is likely to accelerate next year.

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