Beijing, May 31: China’s manufacturing sector experienced a further slowdown in May, according to a survey released by the National Bureau of Statistics (NBS) on Sunday. The decline in new export orders and rising production costs have intensified pressure on the industry.
Data shows that the official Manufacturing Purchasing Managers’ Index (PMI) fell to 50 in May, down from 50.3 in April, marking a three-month low. A PMI reading of 50 indicates the boundary between expansion and contraction.
While production increased during this period, demand weakened. The manufacturing PMI survey recorded a production sub-index of 51.2 and a new orders sub-index of 49.9.
New export orders dropped from 50.3 to 48.6 in May, largely due to ongoing conflicts in West Asia and global uncertainties.
These figures have heightened concerns for the Chinese government, which is already grappling with a growing imbalance between supply and demand. China’s economy has long relied heavily on exports, but now, exports are no longer supporting economic growth at previous levels.
Additionally, several countries are taking steps to curb the influx of cheap Chinese products, which negatively impacts their domestic industries, economic growth, and employment.
According to a report by the South China Morning Post, major EU member states are working towards implementing stricter measures against the influx of cheap products from countries with “industrial overcapacity,” such as China.
The report highlighted that a document signed by Spain, Italy, the Netherlands, France, and Lithuania called for a more aggressive response from the EU against “systematic and structural industrial overcapacity.” These terms are frequently used in the context of China.
This initiative comes at a time when the European Commission is set to hold a special discussion on China policy, aiming to formulate new strategies in response to rising competition from China, which has raised concerns among governments and industries.
The document, which has not yet been made public and was first reported by the Financial Times, advocates for a more aggressive use of protective measures against sector-specific disruptions within the EU. It calls for a broader approach compared to existing product-based anti-dumping cases.
Under these protective measures, tariffs or import quotas may be imposed in cases where a surge in imports harms local industries.
Historically, these measures have been used sparingly, particularly to control the rise in imports of products like steel and ferroalloys from China. Ferroalloys are crucial products used in the steel industry.
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