Economy starts to cool

A survey of more than 400 companies by HSBC and Markit Economics showed Chinese manufacturing growing at a slower pace in April after Beijing introduced a raft of measures to tighten bank lending and property speculation.

 

The purchasing managers’ index (PMI) fell to a seasonally adjusted 55.4 from 57 in March – a number above 50 indicates an expansion.

 

Qu Hongbin, chief China economist at HSBC in Hong Kong, said the data represented “good news” after China showed record rises in property sales in March and first quarter GDP growth of 11.9% in 2010, the fastest in three years.

“Beijing’s policy tightening is starting to cool the overheated economy, which will help to contain inflationary risk in the coming quarters,” he said.

Investor Marc Faber said, “The market is telling you that something is not quite right. The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”