China’s manufacturing activity decelerated in June as US-Chinese trade tensions added to concern the economy is cooling due to tighter government controls on lending, a survey showed Saturday.
The National Statistics Bureau’s (NBS) purchasing managers’ index declined to 51.5 from May’s 51.9 on a 100-point scale on which numbers above 50 show an acceleration.
China is facing US tariff hikes in a dispute over trade and technology, but economic indicators already are turning down after Beijing tightened lending controls to rein in a rise in debt.
Exports have shrunk as a share of China’s economy and contribute less than 1% of annual growth, but still support millions of manufacturing jobs.
Indicators of exports, new orders and manufacturing all weakened in June, the NBS survey showed. It is conducted in partnership with an industry group, the China Federation of Logistics & Purchasing.
The International Monetary Fund (IMF) forecasts this year’s Chinese economic growth to decline from last year’s 6.9% to 6.6%.
Longer-term, the IMF expects growth to decline to 5.5% by Y 2023, that is still strong, just not as strong.
China’s RMB Yuan headed to its weakest since Y 2008, and the country’s stock slump also has further to go.
The currency’s decline will only deepen as monetary policy on the Mainland diverges from that of the Fed.
As for what is going on now, the steepest drop for the RMB Yuan Vs USD since the devaluation almost 3 years ago, and a Bear market in stocks, it is really not hard to tell how officials will respond, they will say they are winning, but will fade and negotiate a fair trade deal with the US.
Have a terrific weekend