According to a Reuters survey released on Wednesday, China’s manufacturing activity most likely declined for a second straight month in November, fueling calls for more stimulus measures as factory owners battle to find orders both domestically and internationally.

Although the official purchasing managers’ index (PMI) is predicted to have rebounded to 49.7 in November following its unexpected decline to 49.5 last month, according to the consensus prediction of 31 economists surveyed by Reuters, the indicator is projected to remain below the 50-point threshold that separates expansion from contraction.

Despite some encouraging indicators in the mixed October statistics, most economists seem to believe that the economy is still struggling to gain pace. All respondents returned scores between 49.0 and 50.2, and the majority predicted a little contraction of between 49.6 and 49.8. 

The second largest economy in the world has struggled to recover from the COVID-19 pandemic this year due to a number of factors, including a severe real estate market crisis, dangers associated with local government debt, sluggish global growth, and geopolitical tensions.

Pressure to implement additional stimulus has increased as a result of the flurry of policy support measures that have had only a limited impact.

Following an 11.9% jump in September and a 17.2% gain in August, which experts ascribed to variable input costs, profit growth at China’s industrial firms returned to the low single digits last month. October saw a decline in both new export and import orders.

Due to China’s sluggish recovery, several commentators have warned that unless authorities take action to realign the economy towards domestic consumption and market-allocation of resources, China may flirt with stagnation akin to that of Japan later this decade.

The governor of China’s central bank stated on Tuesday that he was “confident that China will enjoy healthy and sustainable growth in 2024 and beyond,” but he also recommended structural changes to lessen the country’s reliance on real estate and infrastructure.

According to policy advisors, if the government wants to maintain this year’s target of “roughly 5%” annual economic growth, it will have to carry out further stimulus next year.

On Thursday, the official PMI will be made public. Analysts predict that Friday’s private Caixin factory survey will show a little increase in reading, from 49.5 in October to 49.8.

(Adapted from Nasdaq.com)

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