China admits its economy is in trouble

Oct 05, 2015, 08:30 am

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China's economy isn't going well. Even low-quality jobs are in short supply in China./ Source from Quanzhou Evening News

By Hong Soon-do, Beijing correspondent, AsiaToday - Things aren't going so well for the Chinese economy. Many indicators are clearly showing signs of bad times.
According to sources in Beijing on Sunday, the Caixin General China Manufacturing Purchasing Managers Index (PMI) was 47.2 in September, while the Chinese government's official PMI was 49.8. The reading is down from a final reading of 47.3 in August, indicating that the economic recovery won't be easy. A reading below 50 indicates activity is shrinking while one above indicates expansion.

The number of registered unemployed urban residents, the most sensitive indicator that reflects business condition, is also showing signs of economic slowdown. While there were 8.86 million jobless urban residents in 2008, many analysts project there will be nearly 10 million unemployed urban residents this year.

China's debt problems are also raising concerns about the seriousness of China's economic problems. The total debt-to-GDP ratio for China is expected to reach over 280% in the third quarter. China's corporate debt is particularly in a serious situation. The recent bankruptcy of two Chinese state-owned companies Baoding Tianwei and China National Erzhong Group (CNEG) reflects the reality of the Chinese economy.

In the meantime, Chinese Premier Li Keqiang made a frank confession for the first time since he took office of the fact that it is not easy for China to grow its economy by 7%. While addressing a reception held on September 30 to mark the 66th anniversary of the founding of the People's Republic of China, the premier said, "It is not easy for China to maintain a growth rate of around 7%." His recent statement is quite different from his previous one since he had been emphasizing that China's overall fundamentals are still upbeat.

Besides, the authorities decided to stop releasing monthly preliminary readings of the Caixin Manufacturing PMI starting from this month in order to prevent emotional turmoil of economic units. Bi Xiaodong, president of Weihai Delbung International, said, "The government's decision to stop releasing the manufacturing PMI indicates that the authorities admitted that the Chinese economy is hurting."

#China #economy #PMI 
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