Surveys show China’s economy is growing, but at a modest pace

BANGKOK (AP) — Surveys of Chinese factory managers in June showed a mixed outlook for the world’s second-largest economy, with growth steady but not really picking up.

The Chinese Federation of Logistics and Purchasing’s official purchasing managers’ index (PMI) remained at 49.5, the same as in May, on a scale up to 100, with 50 marking the limit for expansion.

“From the perspective of output, China’s economy is maintaining expansion, but the momentum of recovery still needs to be consolidated,” the official Xinhua News Agency quoted Zhao Qinghe, a senior statistician at the National Bureau of Statistics.

The PMI for new export orders fell to 49.4 from 49.6, possibly reflecting announcements by the European Union and the United States to increase tariffs on electric vehicle imports from China.

A private sector survey released Monday by financial media group Caixin was more optimistic, rising to 51.8 from 51.7 a month earlier, the fastest expansion of factory output in two years, the firm said. Analysts had forecast a decline.

But while sentiment was positive, confidence among purchasing managers fell to its lowest in more than four and a half years amid concerns about fierce competition and uncertain market conditions, Caixin said.

The surveys offered little insight into whether various measures to stimulate the real estate sector, such as lowering mortgage rates and down payments, had much impact on an industry-wide slump that followed a crackdown on excessive borrowing by developers.

“June PMIs were mixed, but on balance suggest the recovery has lost some momentum over the past month,” Capital Economics said in a report.

The official PMI reading for the high-tech manufacturing sector rose to 52.3 in June, from 50.7 in May, reflecting the government’s ambition to invest more in upgrading factories and equipment in new sectors such as computer chips and electric vehicles.

“This shows that the transformation and upgrading of China’s manufacturing industry continues to make progress,” Zhao said.

Chinese leader Xi Jinping has made growing such advanced industries a top priority, a theme likely to dominate the upcoming meeting of top officials of the ruling Communist Party when they meet later this month.

Xinhua said in a separate report that the party would announce a new round of “deep and comprehensive reforms” at the meeting.

Such measures will “set the course for the world’s second-largest economy,” the report said.

Elaine Kurtenbach, The Associated Press