Economy will continue to face downward pressure in second half: expert
China's manufacturing sector showed signs of slight improvement as the latest HSBC survey of manufacturers issued Tuesday gave a preliminary reading of 49.6 for June, a three-month high. The HSBC flash manufacturing purchasing managers' index (PMI) rose from the final reading of 49.2 in May and exceeded the market expectation of 49.4. But it was still below the 50-point mark that separates expansion from contraction. HSBC is scheduled to release its final reading for June's PMI on July 1.
"China's economy showed slight recovery following a series of government policies intended to stabilize growth," Ding Jianping, director of the Research Center for Modern Finance at the Shanghai University of Finance and Economics, told the Global Times on Tuesday.
Other economic indicators also pointed to the slow recovery of the economy. The country's industrial production rose by 6.1 percent year-on-year in May, higher than 5.9 percent in April and 5.6 percent in March, statistics from the National Bureau of Statistics (NBS) showed.
Profits of Chinese industrial businesses increased by 2.6 percent year-on-year in April, reversing the 0.4 percent dip in March, according to the NBS.
Ding noted that China will still face great economic downward pressure in the second half of this year because the PMI was still below the 50-point level, indicating weak sentiment of entrepreneurs.
A breakdown of HSBC's survey results showed that the sub-index of output climbed to 50.0 in June from May's 49.3, hitting a two-month high.
The sub-index of new orders also increased to 50.3, the first expansion in the past four months.
The sub-index of employment dropped down to the lowest point in six years, indicating continuing economic weakness and pessimistic outlook.
However, the NBS data showed that unemployment rate stood at 5.1 percent in May, dropping slightly from April.
"A possible rebound in the US and European markets in the second half can help boost China's economy, raising -business confidence and promoting employment growth," Ding said.
The inventory sub-index saw the first expansion in the past four months, which means enterprises were supplementing inventories while the on-hand inventory dropped to one-year low.
Ding believed that the government will further ease monetary policies in the second half to stimulate growth and promote employment.
"How to deal with the repercussions of those policies, such as excess market liquidity, will be another problem for the -Chinese government," Ding said.
