China is seeking new ways to generate growth by moving away from lower-end manufacturing towards service-based industries, but has seen its overall economic growth slow markedly in the past decade.
Official figures showed a deepening pessimism in the manufacturing sector, with the government’s purchasing managers index (PMI) falling to its lowest level since August 2012.
The PMI was at 49, down from 49.4 in January, according to the National Bureau of Statistics (NBS).
A figure below 50 indicates a negative outlook as measured by managers’ purchasing intentions.
The pessimism was influenced by slowing factory activity during the Chinese New Year holidays in early February, as well as the trimming of excess industrial capacity, Xinhua news agency quoted NBS statistician Zhao Qinghe as saying.
The PMI released by private company Caixin Insight Group showed a reading of 48.0 per cent, down from 48.4 per cent in January, its lowest level in five months.
“The index readings for all key categories including output, new orders and employment signalled that conditions worsened, in line with signs that the economy’s road to stability remains bumpy,” said Caixin chief economist He Fan.
“The government needs to press ahead with reforms, while adopting moderate stimulus policies and strengthening support of the economy in other ways to prevent it from falling off a cliff.”