Star Metro - China manufacturing contracts for fourth straight month

China is facing a crisis in its vast real estate sector as well as lackluster confidence among households and businesses, which is hindering consumption, while geopolitical tensions with Washington and the European Union threaten foreign trade.

In August, the Purchasing Managers' Index (PMI) -- a key barometer of industrial output -- stood at 49.1 points, the National Bureau of Statistics (NBS) announced.

This represents a stronger contraction than in July (49.4 points) for the index, which is based in part on company order books.

A figure above 50 indicates an expansion in manufacturing activity, while below that is a contraction.

Analysts surveyed by Bloomberg had anticipated a decline in August -- but a more moderate one of 49.5.

China's post-COVID recovery has been brief and less robust than expected.

While some sectors have largely regained their strength -- including tourism and the auto industry -- others are struggling, particularly real estate, a key growth driver.

The non-manufacturing PMI, which includes services, was in positive territory in August at 50.3 points compared with 50.2 a month earlier.

From being the world's workshop for cheap products, China is undergoing a transition in its growth model, attempting to become essential for future hi-tech industries, including artificial intelligence.

In mid-August, China released a series of economic indicators deemed disappointing despite recent government measures aimed at trying to boost growth.

In July, demand for bank loans contracted for the first time in nearly 20 years, according to official figures, also indicating a slowdown.

N.Fournier--SMC