China manufacturing activity contracts in September, HSBC survey shows

GlobalPost

China’s manufacturing activity shrank in September for the 11th month in a row, British banking giant HSBC said in a report, turning up the pressure on Beijing to inject more liquidity into the world’s second-largest economy.

The Agence France-Presse reported that the HSBC purchasing managers’ index stood at 47.9 this month, slightly better than the 47.6 recorded in August, but still below the key 50 threshold that indicates contraction.

“Beijing should step up easing to support growth and employment,” HSBC economist Qu Hongbin said.

“Fiscal measures should play a more important role in the coming months.”

Bloomberg said the data highlights the challenges facing Chinese leaders, who are preparing to hand over power to the next generation of policymakers in a once-in-a-decade leadership transition.

While Beijing wants to keep the economy chugging along at a reasonably fast pace, it is reluctant to open the credit valves like it did back in 2009 for fear of reigniting property prices and inflation – both of which are politically sensitive in China and have caused major headaches for leaders in the past three years.

China has cut interest rates twice since June 1 to boost investment and is encouraging state-owned companies to pour money into infrastructure projects after official data showed economic growth fell to a three-year low of 7.6 percent in the second quarter, the Associated Press reported.

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