BEIJING: Chinese
manufacturing contracted in May for the seventh consecutive month as exports
deteriorated, British banking giant HSBC said, arguing the data showed the need
for more policy easing.
HSBC's purchasing managers index (PMI), which
measures factory output, fell to 48.7 in May from 49.3 in April, the banking
group said in a statement, released on Thursday.
A reading above 50 indicates expansion, while a
reading below 50 suggests contraction.
HSBC linked the contraction to worsening conditions
in the export sector, arguing that the government would have to do more on top
of the liquidity easing and infrastructure investment it has already
undertaken.
"This calls for more aggressive policy easing,
as inflation continues to slow. Beijing policy makers have been and will step
up easing efforts to stabilise growth," said HSBC's chief economist for
China, Qu Hongbin.
"As long as the easing measures filter
through, China will secure a soft landing in the coming quarters."
China's exports grew by just 4.9 percent in April
from a year earlier while the official data for May has not yet been released.
HSBC's manufacturing figures are typically more
pessimistic than China's official numbers.
The HSBC survey puts more emphasis on smaller
companies, which are suffering more in the economic downturn than state-owned
giants.
China's economy is widely expected to slow this
year as woes in key export markets such as Europe and the United States hit its
overseas sales.
The government has set a target of 7.5 percent
economic growth this year. China's economy grew 9.2 percent last year and 10.4
percent in 2010.
- AFP/al
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