China’s manufacturing sector expanded for a fifth month in December, but growth slowed a touch more than expected in a sign that government measures to rein in soaring asset prices are starting to have a knock-on effect on the broader economy.
The official Purchasing Managers’ Index (PMI) stood at 51.4 in December compared with 51.7 in November. A reading above 50 indicates an expansion on a monthly basis while one below 50 suggests a contraction. December’s reading was slightly below the forecast in a Reuters poll for 51.5.
Rolls of steel are stacked inside the China Steel Corporation factory, in Kaohsiung, southern Taiwan. Reuters
A housing boom in the second half of 2016 and a government spending spree on infrastructure have helped boost prices for commodities from cement to steel, giving the manufacturing sector a much-needed lift. But the government is cracking down on speculative property buying, and signals from policymakers that more will be done to contain asset bubbles and rising debt – even at the expense of slower growth – means extra stimulus measures could be limited.
“Today’s PMI figures suggest that the change of policy tone has taken its toll, as the authorities are seriously concerned about the asset bubbles,” said Zhou Hao, senior economist at Commerzbank.
