Logo of Phnom Penh Post newspaper Phnom Penh Post - Trade war and weak yuan affect Asian giant

Trade war and weak yuan affect Asian giant

Content image - Phnom Penh Post
China's yuan displays for photo with US Dollars. AFP

Trade war and weak yuan affect Asian giant

Chinese factory activity slowed in October, official data showed on Wednesday, adding to a growing list of bad news for the Asian giant as it struggles to maintain economic momentum in the face of US tariffs and a weakening yuan.

The Purchasing Managers’ Index (PMI), a key gauge of factory conditions, came in at 50.2 for the month, down from 50.8 in September, the National Bureau of Statistics said.

The figure was also below the 50.6 reading tipped in a Bloomberg News survey of economists, though it was still slightly above the 50-point mark that separates expansion from contraction.

The figures are the latest sign that the world’s second-largest economy is losing momentum as it faces challenges at both home and abroad – from a trade war with the US to a massive debt buildup.

“All the numbers from China’s PMI release today confirm a broad-based decline in economic activity,” ANZ’s Raymond Yeung said in a research note.

“Economic conditions facing China’s private sector are much worse than what the headline figure suggests,” he warned, noting that a closer analysis of the figures shows that manufacturing by small and medium-sized businesses actually contracted in October.

Chinese economic growth slowed to 6.5 per cent in the third quarter, down from a high of 6.8 per cent this year.

The number was in line with Beijing’s annual target. But more downward pressure could threaten the country’s key political goals of eliminating poverty by 2020 and building a “moderately prosperous society”.

US tariffs on virtually all Chinese imports have sapped confidence in Beijing’s ability to maintain current growth levels.

Analysts say that the country’s overleveraged companies and local governments are likely to put a further drag on expansion.

China’s ailing stock markets have made the concerns even more acute, Yeung said, noting that “risks related to stock-pledged lending have escalated due to the fall in Chinese equities”.

Offering stock as collateral for loans is a common practice in China.

Further complicating the picture is the falling price of the yuan against the dollar, with the unit at its lowest level in a decade.

MOST VIEWED

  • Municipal hall releases map detailing colour coded Covid risks by commune

    Phnom Penh municipal governor Khuong Sreng released an official map detailing the red, yellow and dark yellow zones within the city under the new lockdown orders for Phnom Penh announced on April 26. The designation of red, dark yellow and yellow corresponds to areas with high,

  • Inter-provincial travel ban lifted; Phnom Penh and Takmao not exempted

    The government on April 25 decided to lift the inter-provincial travel ban and the closure of tourist attractions across the country, effectively immediately. The travel ban and closures of all resorts were imposed on April 6 and 17 respectively in a bid to curb the spread of Covid-19,

  • Phnom Penh, Takmao lockdown extended for another week

    The government late on April 26 announced an extension of lockdown in Phnom Penh and adjacent Takmao town in Kandal province for another seven days – or longer if residents do not comply with Covid-19 preventive measures and the community outbreak does not subside – until May 5. According

  • Gov't mulls extension of Phnom Penh, Takmao lockdown

    The Inter-ministerial National Commission for the Control and Enforcement of Lockdown held a video conference meeting on April 25 to review a draft document on the extension of lockdown in Phnom Penh and adjacent Kandal province’s Takmao town. The meeting was chaired by Minister of

  • Gov’t issues guidelines as lockdown nears end

    The government has issued a five-page set of instructions to be enforced when the three-week lockdown of Phnom Penh and adjacent Takmao town in Kandal province ends on May 6. According to an announcement signed by Prime Minister Hun Sen on May 4, the instructions cover a

  • Phnom Penh unveils rules for post-lockdown transition

    The Phnom Penh Municipal Administration issued a set of detailed guidelines for the seven days to May 12 after the capital emerges from lockdown at the onset of May 6. In the 14-page document signed by municipal governor Khuong Sreng released on the evening of May 5, the