Foreign demand slowed down for the manufacturing sector in China. As a consequence, the month of July saw a sluggish factory growth. On the other hand, the government initiated infrastructure that generated a successful construction boom. In the end, the second-largest economy in the world is still able to maintain growth.
The Government Is Willing to Stagnate Growth in Order to Dissuade Present Large Financial Risks
The Purchasing Managers’ Index or PMI managed to stay above the 50-point threshold that indicates growth in China. This achievement was reiterated for the 12th month in a row as the government invested large funds into construction medium. This way, the demand didn’t fail to make its presence felt for its craving of everything from steel to cement.
However, China decided to play the global expansion card under safe circumstances. Chinese watchers are expecting a flat economic growth in the upcoming months. In the meantime, the government continues its mission to put an end on as many financial risks as possible. The main side effects in achieving these imperatives are increased borrowing costs and lower profits than ever before.
The Month of July Recorded a Weaker Export Orders Which Translated into a Slacking Factory Growth
On Monday, the National Bureau of Statistics revealed a PMI for July of 51.4 points. By comparison, the index for the previous month showed 51.7 points. That’s because export orders plummeted in July. This situation induced a slacking factory growth for the country.
Earlier this month, the United States and China failed in their negotiations for a weaker U.S. trade deficit in China. These unaccomplished talks dented President Donald Trump’s relations with Beijing from a security and economic perspective.
On the other hand, the government managed to restore the order through massive internal efforts. Officials increased investments in domestic infrastructure projects which encouraged the construction sector to keep robust growth. As a consequence, the PMI in this area showed a clear expansion to 62.5 in July. By comparison, the same index was at 61.4 in the previous month.
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