According to latest figures, growth in China’s investment and factory output in August 2015 has come in below forecasts, in a further indication that the world’s second-largest economy is losing steam.
Factory output grew by 6.1% from the year before – below forecasts of 6.4%.
Growth in fixed-asset investment – largely property – slowed to 10.9% for the year-to-date, a 15-year low.
Growing evidence that China’s economic powerhouse is slowing down has caused major investment market falls.
Other indications that China’s economy is weakening can be seen in falling car sales and lower imports and inflation.
Chinese manufacturers cut prices at their fastest pace in six years, largely on the back of a drop in commodity prices, which have dropped sharply over the past year as demand from China faltered.
Last week, Chinese PM Li Keqiang, said his country remained on track to meet all its economic targets for this year despite the economic data.
China has already cut interests rates five times since November 2014 to encourage lending and spur economic activity, along with other measures to boost growth.
PM Li Keqiang pledged that China would take more steps to boost domestic demand and that it would implement more policies designed to lift imports.
China recently revised down its 2014 growth figures from 7.4% to 7.3% – its weakest showing in nearly 25 years.
For 2015, the Chinese government is targeting annual economic growth of about 7%.
Meanwhile, the Chinese authorities said they would take new steps towards a more market-based economic system by offering shares in state-owned businesses to private investors.
The move, which they said would help improve corporate governance and asset management, is planned to take place before 2020.
China’s industrial economy is dominated by 111 conglomerates which are state owned.
According to latest figures, the sales of Rolls-Royce luxury cars have been affected by a fall in demand in China.
Rolls-Royce CEO Torsten Muller-Otvos said the turnaround in the market had been unexpectedly fast.
“We have been surprised by the speed of development in the Chinese market in a completely different direction,” he said.
Chinese buyers have been affected by the slump in the stock market, slower growth and a corruption clamp-down.
However, Torsten Muller-Otvos played down fears that recent events in China would last long, forecasting that sales there would recover in the next two years.
“China has never been our number one market. Our number one market is the United States and due to the fact we are properly balanced we can cope with some of the downturn in China,” he explained.
Asian shares continued to fall on September 2, with Shanghai opening down more than 4% amid continuing worries about China’s growth.
On September 1, data suggesting China’s manufacturing sector was shrinking at its fastest pace in three years ignited a global market sell-off, resulting in US stocks closing down nearly 3%.
The Shanghai Composite recovered some ground to trade down 3.6% to 3,054.17.
Hong Kong’s Hang Seng index was lower by 1.7% to 20,818.22 in early trade.
Chinese markets will close at the end of September 2 for a two-day holiday to commemorate the end of World War Two.
Mainland Chinese stocks have lost nearly 40% of their value since June, despite attempts by the government and regulators to prop up the market.
Meanwhile, data showing US factory activity fell to a more than two-year low in August added to the already grim sentiment among investors.
Crude oil futures also continued downwards after an 8% fall in US trade, amid concerns about slowing demand from China.
Japan’s benchmark Nikkei 225 index was up 0.8% to 18,296.67 after leading the region’s losses in the previous session, down nearly 4%.
Australia’s S&P/ASX 200 was lower by 1.2% at 5,036.60 points as economic growth figures for the second quarter came in below expectations.
The economy expanded 0.2% from the previous quarter and was up 2% compared with the same period last year.
Economists were expecting quarterly growth of 0.4% while the annual rate was forecast to be up 2.2%.
In South Korea, shares were also lower after government data showed exports fell 4.3% in July, while imports rose 0.7%.
That led the current account surplus to fall to $9.5 billion in seasonally adjusted terms from a record high of $10.7 billion in June.
South Korea’s benchmark Kospi index was down 0.3% at 1,908.50.
China’s stock market has continued its recent slide after fresh data provided further evidence of a slowdown in the country’s economy.
According to an official survey, China’s manufacturing activity contracted at its fastest pace in three years in August.
As a result, the mainland’s benchmark Shanghai Composite share index fell by 1.2% to 3,166.62.
In Hong Kong, the Hang Seng index dropped 2.2% to 21,185.43.
The slowing of the world’s second largest economy and the extreme volatility on the mainland stock markets have weighed on global equities over the past few weeks.
Chinese mainland stocks have been on a steep downward slide over the past few months, shedding almost 40% since June.
Any fresh indication that China’s woes are set to continue is likely to frustrate Beijing’s attempts to reassure traders and stabilize the Shanghai and Shenzhen markets.
Chinese authorities have injected money into the markets, allowed the state pension fund to start buying up shares and lowered lending rates.
So far though, none of those measures have managed to push the markets back into positive territory.
China has also cracked down on people accused of spreading online “rumors”, and who the authorities say have been “destabilizing the market”.
Shares were also lower elsewhere in Asia. Japan’s benchmark Nikkei 225 index saw the region’s biggest losses, closing the day down 3.8% at 18,165.69.
Australia’s S&P/ASX 200 ended 2.1% lower at 5,097.40.
Traders in Sydney were cautious as any slump in China is likely to have an effect on Australia, which relies on the country as its main export destination.
The decision by Australia’s central bank not to cut interest rates also contributed to the downbeat mood.
In South Korea, the benchmark Kospi index also fell, dropping 1.4% to 1,914.23.
Affected by the slowdown in China, Seoul reported on September 1 that exports fell 14.7% in August from a year earlier, worse than expected and the biggest drop in six years.
In an effort to calm stock markets after two days of turmoil, China’s central bank has cut its main interest rate by 0.25 percentage points to 4.6% to boost growth in the country’s economy.
It is the fifth interest rate cut since November and will take effect on August 26.
The People’s Bank of China’s move has boosted global share prices further, with Wall Street’s Dow Jones index opening more than 1.7% higher after the move.
In mid-afternoon European trading, London’s FTSE 100 was up almost 3%, while Germany’s Dax and the Paris Cac were ahead nearly 5%.
Other European markets, including Lisbon, Madrid, Moscow and Milan, were all sharply higher.
The People’s Bank said that the interest rate cut was to reduce “the social cost of financing to promote and support the sustainable and healthy developments of the real economy”.
The Chinese central bank also acted to increase the flow of money in the economy by cutting the amount of cash banks must keep in reserve, effectively freeing them to lend more cash.
Its move was broadly welcomed by economists.
A research note from JP Morgan stated: “China’s decision to cut… will be regarded by many investors as overdue. The litmus test will come overnight, however, and the efficacy of the… cut in boosting the domestic stock market.”
The Chinese authorities have taken a number of steps to help stem stock market losses since the market began a series of heavy falls in June.
Earlier, China’s falling stock market had hit markets around the globe on August 24, and – although Asian markets were again hit overnight – European stocks had already opened in a more optimistic mood on August 25.
The main Shanghai Composite index closed Tuesday’s session down 7.6% at 2,964.97 points. Japan also saw more sharp falls, sending Tokyo’s Nikkei index down 4%.
The global sell-off has been driven by fears that China’s slowing growth means less business for everyone else.
China’s booming economy of the last 30 years has seen the country suck in supplies of raw materials for manufacturing and, increasingly, manufactured and luxury goods from other countries.
This website has updated its privacy policy in compliance with EU GDPR 2016/679. Please read this to review the updates about which personal data we collect on our site. By continuing to use this site, you are agreeing to our updated policy. AcceptRejectRead More
Privacy & Cookies Policy
Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
