China’s Factory Output Falls To Lowest In Two Years; Decline In Exports Since 2008 Financial Crisis To Blame

China’s factory output has fallen to its lowest level in the last two years, driven mainly by the fastest decline in exports since the 2008 financial crisis, reports Reuters.

According to the latest data released National Bureau of Statistics (NBS), the Caixin Purchasing Managers’ Index (PMI) fell to 49.2 in February from 49.5 in January (2019). The Caixin PMI is a private survey focused on smaller businesses and offers a first glimpse into the operating environment.

This shrink in factory activity has continued for the third straight month, showing cracks in the slowing economy.

In January 2018, China announced that its official economic growth came in at 6.6 per cent in 2018 — the slowest pace since 1990. China’s GDP grew by a tepid 6.4 per cent in the fourth quarter of 2018, according to data released on Monday by the National Bureau of Statistics. China's economy grew 6.7 per cent year-on-year in the first three quarters of 2018.

Trump-Xi

US President Donald Trump’s ‘America First’ policy has contributed towards muted demand for Chinese exports. "US unilateralism, protectionism and the China-US trade tensions have affected market confidence, causing private sector investment to slow in China," said Cong Yi, a professor at the Tianjin University of Finance and Economics.

However, the situation might improve in the current fiscal as China and the US are currently negotiating a deal to end the trade war.

Also Read: Ceasefire In Trade War? Trump Delays 25 Per Cent Tax Imposition On Chinese Imports Worth $200 Billion Citing Progress In Trade Talks