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China manufacturing still in contraction

BEIJING — A Chinese manufacturing gauge remained in negative territory for the fourth month, indicating that government efforts to counter an economic slowdown have had only a limited impact.

BEIJING — A Chinese manufacturing gauge remained in negative territory for the fourth month, indicating that government efforts to counter an economic slowdown have had only a limited impact.

The preliminary HSBC/Markit Purchasing Managers Index (PMI) for this month rose to 48.3 from last month’s final reading of 48.0, but was still below the 50 line separating expansion from contraction.

The survey showed contractions in new orders and output moderated somewhat, though employment decreased at a faster rate and new export orders slipped back below the 50 line after a pick-up last month, suggesting that the external environment remains difficult for Chinese firms.

“Domestic demand showed mild improvement and deflationary pressures eased, but downside risks to growth are still evident as both new export orders and employment contracted,” said Mr Qu Hongbin, Chief Economist for China at HSBC, in a statement accompanying the PMI.

Sustained weakness in manufacturing would pressure Premier Li Keqiang to expand pro-growth measures beyond a required-reserves cut for rural banks announced on Tuesday and what some analysts have dubbed a “mini stimulus” package of railway spending and tax relief. The report followed data last week showing China’s expansion moderated to the slowest pace in six quarters.

If growth keeps slowing, “it will probably become a further nudge in the elbow towards more easing”, Ms Helen Qiao, Chief Greater China Economist at Morgan Stanley in Hong Kong, said on Bloomberg Television.

The country’s top economic planning body yesterday said this was unlikely at least in the near term, saying the economy will be fine without any heavy stimulus.

“We are confident that we have all (the) means and are capable of keeping economic growth stable and healthy in the relatively long term,” Mr Li Pumin, a spokesman at the National Development and Reform Commission, told a media briefing.

“We will not take short-term strong stimulus in response to momentary economic fluctuations.” Agencies

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