After last year’s scare in China with the manufacturing industry taking a step backwards with a year of contraction, it has rebounded and returned to positive growth for four straight months. However, February was China’s lowest month of positive growth since November after posting record growth in January. February’s growth was 50.4, while in January it was 52.3. On the scale, readings above 50 indicate expansion, while below 50 indicates contraction.
The decline can be contributed to the coming of the Year of the Snake and the Chinese celebrations of the new lunar calendar. The holiday is held within the first two months of the Gregorian calendar, between January 21 and February 21. This year it took place on February 10th, but the official holiday is a week long. Although it is a week long, for those traveling far away, employees usually take more time off to allow for visits home and extend the holiday break. Another cause of the slow in growth could be contributed to output and new orders growing at a slower pace. Pressures of inflation still remain in the economy, with both output and input prices increasing from January.
It has been a long, slow road back from the hit that the economy took last year, but with the consistent growth that China has been showing it seems as though it will be able to return to the dominance that it was formerly at. The banks have doubled their lending this year so far as Beijing seeks to boost the growth of the economy to further stimulate the expansion. The possibility of a hard landing is becoming more and more unlikely, which is reassuring because six months ago it seemed like there was no way to avoid it. What are ways that you think China can expand its manufacturing industry, or do you see it contracting in future years?