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| China manufacturing growth in slowdown | China manufacturing growth in slowdown |
| (about 2 hours later) | |
| China has reported a slowdown in manufacturing growth, underlining the challenges its new leaders face in spurring economic growth. | China has reported a slowdown in manufacturing growth, underlining the challenges its new leaders face in spurring economic growth. |
| China's Purchasing Managers' Index (PMI), which surveys big firms, fell to 50.4 in January from 50.6 in December. | China's Purchasing Managers' Index (PMI), which surveys big firms, fell to 50.4 in January from 50.6 in December. |
| However, HSBC said its PMI for China, which surveys smaller firms, rose to 52.3 in January, from 51.5. | However, HSBC said its PMI for China, which surveys smaller firms, rose to 52.3 in January, from 51.5. |
| Analysts said volatility in the two measures was normal and the underlying trend was that of a recovery. | Analysts said volatility in the two measures was normal and the underlying trend was that of a recovery. |
| The PMI is a key indicator of activity in the sector and a reading above 50 shows expansion. | The PMI is a key indicator of activity in the sector and a reading above 50 shows expansion. |
| "The economy is in the midst of mid-cycle upswing... there is sufficient economic momentum and political impetus to ensure a continuation of the current expansionary phase," said Alistair Thornton, senior China economist at IHS Global Insight. | "The economy is in the midst of mid-cycle upswing... there is sufficient economic momentum and political impetus to ensure a continuation of the current expansionary phase," said Alistair Thornton, senior China economist at IHS Global Insight. |
| He added that manufacturing activity usually slows around the Chinese New Year, while a colder-than-normal winter had caused problems for some firms. | He added that manufacturing activity usually slows around the Chinese New Year, while a colder-than-normal winter had caused problems for some firms. |
| The political situation may also have had an impact, he said. | The political situation may also have had an impact, he said. |
| "Businesses may be taking a wait-and-see attitude prior to the government transition in March. | "Businesses may be taking a wait-and-see attitude prior to the government transition in March. |
| "It is important not to rush to the conclusion that the economy is taking a nose-dive again." | "It is important not to rush to the conclusion that the economy is taking a nose-dive again." |
| 'Demographic shift' | |
| China's manufacturing sector has been one of the biggest drivers of its growth over the past few decades. | |
| A key role in the sector's success has been played by the availability of a large pool of low-cost labour, which has seen China become the destination of choice for many global firms looking to make goods at a low cost. | |
| However, researchers at the International Monetary Fund (IMF) have said that China's pool of low cost labour is likely to decline in the next few years. | |
| "China is on the eve of a demographic shift that will have profound consequences on its economic and social landscape," Mitali Das and Papa N'Diaye, IMF's researchers, said in a working paper released earlier this week. | |
| "Within a few years the working age population will reach a historical peak, and then begin a precipitous decline." | |
| They added that the core of the working age population, those aged 20-39 years, has already begun to shrink and that China's labour supply will cross a threshold between 2020 and 2025. | |
| They said as the labour pool declines it will have "potentially far-reaching implications domestically and externally". | |
| They said such a shift would require China to rebalance its growth model from one fuelled by investment to one that is let by private consumption. |