Customers look at a model of a new residential compound at a showroom of Longfor Properties in Hangzhou, Zhejiang province. China cut mortgage rates and downpayment levels for some home buyers yesterday for the first time since the 2008 global financial crisis, making one of its biggest moves this year to boost an economy increasingly threatened by a sagging housing market.
AFP
China’s manufacturing activity came in below initial expectations in September, HSBC said yesterday, adding to pressure on Beijing to address slowing growth in the world’s second-largest economy.
The British bank’s final purchasing managers index (PMI), which tracks activity in China’s factories and workshops, came in at 50.2.
But while the closely watched figure, compiled by information services provider Markit and released by HSBC, is unchanged from August and is above the 50-point level that separates growth and contraction, it is below a preliminary reading of 50.5.
August’s figure was down from an 18-month high of 51.7 in July.
Beijing’s official PMI for August came in at 51.1, down from 51.7 in July. It will release its September figure today.
“Production increased at the slowest pace in the current four-month sequence of expansion, while job-shedding across the sector extended into an 11th successive month,” HSBC said.
Last week’s initial result had sparked some optimism that China’s economy may be showing signs of picking up following a string of weak data recently.
Qu Hongbin, HSBC’s chief economist for China, said the latest reading indicates growth in the sector still lacks vigour.
“Overall, the data in September suggest that manufacturing activity continues to expand at a slow pace,” Qu said in a release accompanying the data.
“We think risks to growth are still on the downside and warrant more accommodative monetary as well as fiscal policies.”
China’s economy grew a stronger-than-expected 7.5% in the second quarter, up from 7.4% in the previous three months, which was the worst since a similar 7.4% expansion in July-September 2012.
China is scheduled to announce third-quarter gross domestic product figures on October 21.
Authorities have since April introduced a string of measures to try to boost growth, including targeted infrastructure spending, small business tax breaks and incentives to spur lending in rural areas and to small companies.
But with indicators in August pointing to slowing industrial production, retail sales and fixed asset investment, economists have intensified calls for further measures.
A slowdown in China’s huge property sector is also weighing on overall growth.
Falls in new home prices accelerated in September, dropping for the fifth straight month, a private survey showed yesterday.
The average price of a new home in 100 major cities was 10,627 yuan ($1,731) per square metre in September, down 0.92% from August, the China Index Academy said in a statement. August prices had fallen 0.59%.
Separately, the People’s Bank of China, the central bank, eased credit policies for the sector, announcing that people who had paid off previous mortgage loans would be treated as first-time buyers and enjoy preferential policies, a move seen as a bid to boost the market.
“These measures suggest that the government does not want to have a sharp correction in the property sector,” economists at Nomura said in a note.
Downward revisions to the HSBC PMI “were in line with our view that growth momentum has continued to lose steam in September,” they said in a separate report.
“We believe the main drag was the property market correction, which we expect to last into 2015.”
The government has in recent years introduced measures to temper soaring prices and appease ordinary citizens hoping to own homes.
However, with those measures kicking in and prices beginning to decline local governments – which rely on land sales for much of their income – are looking for a loosening of those restrictions.
China’s economic growth target for this year calls for an expansion of about 7.5%, the same objective set last year.
Premier Li Keqiang has stressed repeatedly that authorities are not overly focused on achieving that figure – suggesting actual growth could end up lower – but rather are taking a comprehensive view of the economy’s health.
China is attempting to achieve a tricky transformation of its growth model to make consumer spending the main growth driver rather than state-led investment as in the past.
