Two surveys have suggested that China’s manufacturing sector improved or at least stabilized this month compared with the previous month, providing some respite following signs of a slowdown in the economy’s recovery.
China Beige Book, a US-based data provider, said its surveys showed that manufacturing output increased “notably” from last month, as did domestic and foreign orders.
Separately, Goldman Sachs Group Inc cited a pick up in the emerging industries purchasing managers’ index (PMI).
Photo: Reuters
“It’s still too early to put a nail in the coffin of the post-COVID Zero recovery,” China Beige Book said in a statement. “Manufacturing activity defied rumors of demise, though soft demand from Western economies remains a major headwind.”
Revenue and profit margins for Chinese manufacturers as well as the service and retail sectors also increased this month from the previous month, it said.
China Beige Book’s data was based on a survey of about 1,000 Chinese firms conducted between May 18 and Thursday last week.
Morgan Stanley chief China economist Robin Xing (邢自強) remained optimistic about China’s growth trajectory for the year despite the softer data last month.
“I would see recent April data weakness as a hiccup,” he said in an interview with Bloomberg TV, adding that the strength in services spending limited any need for additional stimulus.
“As we have witnessed in other Asian economies who didn’t use paychecks or fiscal transfers to jump-start the recovery, the recovery takes time because you need the service sector to recreate jobs,” he said.
China’s emerging industries PMI, which measures month-on-month changes in activity in sectors such as renewable energy, advanced manufacturing and biotechnology, showed an uptick this month compared with the previous month after seasonal adjustment, Goldman Sachs’s China economist Hui Shan (閃輝) said in a note.
The emerging industries PMI is widely seen as a leading indicator of China’s official manufacturing PMI, and the figures suggest “a tentative sign that manufacturing activity may begin to stabilize,” Hui added.
The official PMI is set to be released today.
The housing market remains a concern, with the China Beige Book survey finding weakness in the sector.
“Construction is continuing to struggle,” Shehzad Qazi, managing director of the survey company said in an interview on Bloomberg Radio. “The property market recovery remains incredibly uneven. Price growth rebounded from April, but sales slowed.”
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS