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| China manufacturing activity sees mixed data | |
| (35 minutes later) | |
| China's manufacturing sector saw mixed fortunes in July, underlining concerns of a slowdown in its economy. | |
| The official Purchasing Managers' Index (PMI), which surveys bigger firms, rose to 50.3 in July from 50.1 in June. | |
| However, HSBC's PMI, which tracks smaller firms, fell to 47.7 from 48.2 in June. The PMI is a key indicator of manufacturing activity and a reading below 50 shows contraction. | |
| This is the third month in a row the HSBC reading has been below that level. | |
| The data comes amid fears that China's growth rate - which has declined for two straight quarters - may slow further. | |
| Figures released earlier this month showed the world's second-biggest economy grew at an annualised rate of 7.5% in the April to June quarter, down from 7.7% in the previous three months. | |
| 'Perfect storm' | 'Perfect storm' |
| China's manufacturing and export sectors have been key drivers of its economic growth. | China's manufacturing and export sectors have been key drivers of its economic growth. |
| However, demand for China's exports has slowed recently, especially from key markets such as the US and Europe as they grapple with their own economic problems. | However, demand for China's exports has slowed recently, especially from key markets such as the US and Europe as they grapple with their own economic problems. |
| At the same time, policymakers have found it tough to boost domestic consumption enough to offset the decline in foreign sales. | At the same time, policymakers have found it tough to boost domestic consumption enough to offset the decline in foreign sales. |
| To make matters more difficult, labour costs in China have been rising, resulting in some companies looking to countries such as Bangladesh and Cambodia for low-cost manufacturing. | To make matters more difficult, labour costs in China have been rising, resulting in some companies looking to countries such as Bangladesh and Cambodia for low-cost manufacturing. |
| Analysts said that despite the slight pick-up in July, these factors continued to be a threat to China's manufacturing sector. | Analysts said that despite the slight pick-up in July, these factors continued to be a threat to China's manufacturing sector. |
| "All this put together has created a perfect storm," Simon Littlewood of Asia Now Consulting Group told the BBC. | "All this put together has created a perfect storm," Simon Littlewood of Asia Now Consulting Group told the BBC. |
| "Today's data doesn't change the reality that the situation in China remains that of declining growth." | "Today's data doesn't change the reality that the situation in China remains that of declining growth." |
| Growth measures | |
| Prompted by these concerns, China has unveiled fresh measures aimed at boosting growth. | |
| Last week, it said that it would suspend value-added tax (VAT) and turnover tax for small businesses with monthly sales of less than 20,000 yuan ($3,257; £2,125), starting from 1 August. | |
| The cabinet said the move would benefit more than six million small companies and boost the employment and income for millions of people. | |
| Beijing said it would also implement measures to simplify customs clearance procedures, cut operational fees and facilitate the exports of small and medium-sized private enterprises. | |
| It also unveiled plans to completely open China's railway construction market to ensure that the country can develop the sector further. | |
| Hongbin Qu, chief China economist at HSBC, said that "these targeted measures should boost confidence and reduce downside risks to growth". |