China Caixin PMI contracts for 10th straight month, missing estimates

Analysts have raised a slew of concerns about the Chinese economy as it transitions from a manufacturing base to services; The country is hooked on debt, the shadow banking sector has imploded, the property market sometimes shows signs of a bubble and major industries are slowing.

China’s official manufacturing PMI rose slightly to 49.7 in December from 49.6 a month earlier, the National Bureau of Statistics said Friday.

Both surveys pointed to a continued albeit gradual loss of momentum, not a sharper deterioration or “hard landing” which has been feared by global investors.

This suggests that the official GDP figure for Q4 2015 will signal some growth. Total new orders shrank for a sixth month, highlighting weak domestic demand as well. Economists said the continued contraction portended more monetary and fiscal support.

The government has also stepped up spending on infrastructure projects and eased restrictions on home buying to boost the sluggish property market.

Although robust, that growth rate has been slowing down year-on-year. Plus, a stronger services sector is cushioning some of the downdraft from factories. The seasonally adjusted Nikkei Services Business Activity Index fell to 50.1 in November from October’s eight-month high reading of 53.2, pointing to slowdown in growth in India’s services sector.

The survey focuses more on small and medium-sized private firms.

Stock markets in China headed further south following the data release.

Shayne Heffernan Funds Manager at HEFFX holds a Ph.D.in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b.