Slower Manufacturing PMI As Demand Weakens

Economic Research	01 July 2016
China
Economic Highlights
Slower Manufacturing PMI As Demand Weakens China’s manufacturing PMI edged down in Jun 2016, mainly pulled by weakening demand given moderation in traditional sectors, particularly for those with excess capacity problems. Looking ahead, we do not believe there will be significant improvement for China’s industrial sector, amid drags from supply-side reform and growing external uncertainties. The ongoing closure of excess capacity and shutdown of non-profitable SOEs will likely keep industrial production growth staying at current low levels. Policy wise, top leaders prefer to use targeted fiscal stimulus to cushion the economic moderation, while stay relatively quiet on further monetary easing to avoid more pressure on declining CNY rate. Economist:  Zhang Fan| +8621 6288 9611 ext 105
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