China strives to increase consumer spending as factory sector continues to slump for fourth month
Following further dire economic news, China launched a number of initiatives to increase domestic demand on Monday, CNN said. However, the country has made no significant announcements regarding fresh spending or tax cuts.
According to information provided by the National Bureau of Statistics on Monday, the official Purchasing Managers’ Index (PMI), which gauges activity in the manufacturing sector mostly at larger businesses and state-owned organisations, registered 49.3 in July.
That result was slightly up compared with 49 in June but the industry has now contracted each month since April. A PMI reading above 50 indicates expansion, while anything below that level shows contraction, CNN reported.
The official non-manufacturing PMI which looks at activities in services and construction, also fell to 51.5. That is the lowest rate since December, when the index hit its weakest level since February 2020 at the start of the coronavirus pandemic.
The NDRC on Monday released a policy document containing 20 measures to restore and expand consumption.
Monday’s manufacturing and service sector figures are just the latest data points that show how China’s economy is struggling.
China’s GDP expanded by only 0.8 per cent in the second quarter of this year, a sharp decline from the meagre 2.2 per cent growth it had in the first three months of 2023. According to CNN, there has been a decline in consumer spending, a decline in the property market, and an increase in the youth unemployment rate to a new high of 21.3 per cent.
On Friday, China unveiled a two-year plan to boost the so-called “light industry,” which includes consumer packaged goods, consumer durables, sports and leisure equipment, and light industrial machinery, according to a statement jointly published by the NDRC, MIIT, and the Ministry of Commerce, CNN reported.
The goal is to speed up the industry’s growth to 4 per cent for 2023 and 2024 after it only registered a 0.4 per cent expansion in the first half of the year, the statement said.