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Sunday, July 1, 2012

Hard landing for Chinese Economy? China June official PMI hits 7-month low

Blogman's Notes: China continues to slow down and may already be experiencing a hard landing but the media spins it that the government can throw a switch and get things rolling again. However, China's factory business is 80% dependent on Exports and as Europe and America face their own problems, orders from these regions will continue to fall. There is nothing that China can do to replace this business, so it must contract as long as Europe and America are contracting. Admitting the fact that China is facing a severe recession or is in a severe recession (which seems to be info coming from people on the ground in China), would send shockwaves through the Global financial world; therefore the charade continues of slowing growth in China whereas the fact is that there is no growth in China; on the contrary China is receding fast. This is even more true in the case of India which will be in depression unless foreign investment returns to pre-2010 levels.

(Reuters) - China's factory downturn worsened in June as a key activity index hit a seven-month low, data expected to raise expectations the central bank may seek more policy easing to revive the world's second-largest economy.

The official Chinese purchasing managers' index (PMI) fell to 50.2 in June after seasonal adjustments, the National Bureau of Statistics said on Sunday, above forecasts for 49.8, but down from May's 50.4.

That was the worse reading since November last year, and a sharp fall in export orders and shrinking new orders suggested a recovery is not in sight. This would fuel bets that Beijing could further relax monetary policy as soon as this month, an analyst said.

"New orders and input prices are still falling, which show there are still many factors affecting production. A recovery in industrial output would take time," Zhang Liqun, a government researcher, said in a statement accompanying the PMI data.

Zhang's cautious tone backed estimates among some analysts that China's economy could worsen in the third quarter as previous policy easing takes time to filter through, potentially jeopardizing Beijing's 2012 growth target of 7.5 percent.

A protracted slowdown in China would further hobble a world economy already bruised by Europe's nagging debt crisis, and an ailing U.S. economic recovery. It is also a headache for Beijing as exporters are mainstay employers in China.
Read More: China June official PMI hits 7-month low | Reuters

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