By Kevin Yao
BEIJING, April 23 Growth in China's vast factory
sector dipped in April as new export orders shrank, a
preliminary survey of factory managers showed on Tuesday,
suggesting the world's second-largest economy still faces
formidable global headwinds into the second quarter.
The flash HSBC Purchasing Managers' Index for April fell to
50.5 in April from 51.6 in March but was still stronger than
February's reading of 50.4.
A sub-index measuring new export orders fell to 48.6 in
April from 50.5 in March, reflecting weaker global demand as the
U.S. economic recovery remains fragile and the euro zone is
mired in recession.
The figures follow an unexpected contraction in export
orders in March to Taiwan, one of the region's biggest providers
of tech gadgets, signalling that Asia's trade-reliant economies
may be losing further momentum.
Exports from South Korea, another big supplier to the global
tech industry, fell by 3.1 percent for the first 20 days of
April from a year earlier.
"New export orders contracted after a temporary rebound in
March, suggesting external demand for China's exporters remains
weak," said HSBC's China chief economist Qu Hongbin.
"Beijing is expected to respond strongly to sustain the
economic recovery by increasing efforts to boost domestic
investment and consumption in the coming months."
The Australian dollar fell to multi-week lows against the
U.S. dollar, euro and pound after the data. Asia stock markets
were lower across the region, with the CSI300 index
of the leading Shanghai and Shenzhen A-share listings down 1.8
The International Monetary Fund on Tuesday cut its 2013
forecast for global growth to 3.3 percent, down from its January
projection of 3.5 percent.
The latest PMI data may overshadow China's recovery in the
second quarter after growth unexpectedly slowed to 7.7 percent
in the first quarter from 7.9 percent in the previous three
The slowdown, which came despite a credit boom, suggesting
the cash sloshing around the economy is not having the desired
effect of stoking growth and could instead exacerbate property
and inflationary risks.
China's industry ministry noted in a separate statement on
Tuesday that companies had no strong desire to invest given weak
demand and overcapacity, and it did not see any improvement in
their difficulties operating in an uncertain and unstable global
Still, the HSBC PMI has been above the 50-point level
demarcating growth from contraction from the previous month
since November 2012, though its failure to break above 53
indicates that the economic expansion it signals is only
Sub-indexes measuring both input and output prices fell in
April, indicating overcapacity upstream and soft demand,
according to the Flash PMI survey.
An employment sub-index also dipped as factory activity
cooled, although China's job market is holding up relatively
well despite slower growth.
The latest Reuters poll showed China's economic growth could
pick up in the second quarter as the government boosts
Analysts in the poll expected full-year economic growth to
pick up slightly to 8.0 percent in 2013 from 7.8 percent last
year, its weakest rate since 1999.
China has set a 7.5 percent GDP growth target for 2013, a
level Beijing deems sufficient for job creation while providing
room to deliver structural adjustment.
The government is expected to step up infrastructure
investment to cushion the economy against global headwinds, but
a big stimulus package looks unlikely as Beijing plans to deepen
reforms to put growth on a more sustainable long-term footing.
On Tuesday the China Daily newspaper quoted a researcher
from the Ministry of Finance as saying that stimulus on the
scale of that in 2008 was not necessary, as the economy is on an
overall stable trend.
The final HSBC manufacturing PMI is scheduled to be
published on May 2, a day after the official PMI.