Wednesday Sep 25, 2024
Wednesday Sep 25, 2024
Wednesday, 9 October 2013 00:00 - - {{hitsCtrl.values.hits}}
The Markit/HSBC services PMI for September dipped to 52.4 from August’s 52.8, although it was still well above the 50 line that separates expansion from contraction. A rise in new business offset a slowdown in new orders, the survey said.
The survey showed business expectations weakened sharply, with respondents citing muted demand, although conditions were still expected to improve in the next year. The expectations sub-index stood at 58.7 in September from August’s 62.0.
“The degree of confidence eased from August’s five-month high and was the second-weakest in the near eight-year series history,” HSBC said in a statement.
The government has an economic growth target of 7.5% for 2013, which would be the weakest rate in more than 20 years, and has repeatedly said it would accept slower growth as it tries to restructure the economy to be driven by consumer demand, rather than investment, credit and exports.
As part of the reforms, businesses may find funding harder to come by as the government looks to tighten credit and curb state spending, adding to the likelihood of slower growth.
“By no means is the economy out of the woods because growth is being driven by the old engines, that is the local government and property,” said Dong Tao, economist at Credit Suisse at Hong Kong.
“Both sectors have their own specific problems and in the long term neither are on a sustainable track.
Over the long term China needs to find new growth engines, China must not continuously rely on local investment and the property market.”
GDP grew at an annual rate of 7.6% in the first half of 2013, slower than 7.7% last year and 9.3% in 2011. GDP data for the third quarter is due on October 18.
On Monday, President Xi Jinping said a “7% annual growth rate will suffice” to meet China’s medium-term goal of doubling per capita income by 2020.
“The slowdown of the Chinese economy is an intended result of our own regulatory initiatives,” Xi said at an Asia-Pacific Economic Cooperation (APEC) forum in Indonesia, adding China’s fundamentals remained good.
The services industry, which has so far weathered the global slowdown much better than the factory sector, is an increasingly important pillar in the economy as it accounts for about 45 of gross domestic product and is the biggest employer in China.
