China’s factory activity slows in May, raising questions over its economy

BEIJING (AP) — China’s industrial sector showed no growth in May, as indicated by an official survey released on Sunday. This has raised concerns about the ability of the country’s economy to withstand the impact of the ongoing Iran conflict and weakening demand.

The official manufacturing Purchasing Managers’ Index (PMI) fell to 50 from 50.3 in April, according to the National Bureau of Statistics. A reading above 50 signifies expansion, while below 50 indicates contraction.

The sub-index for new orders decreased to 49.9 from 50.6 in April, while the production sub-index dipped to 51.2 from 51.5. Additionally, the sub-index for raw material stockpiles declined to 48.6 from 49.3 in April.

Despite global energy disruptions caused by the Iran conflict, China has managed to fare better than many other nations due to its significant oil reserves and diverse energy sources.

Analysts suggest that China’s strong energy security measures have helped it navigate the crisis relatively unscathed compared to its peers.

Exports continue to play a vital role in China’s economic recovery, with robust performance noted in trade with Europe and Southeast Asia.

While challenges persist in the domestic market, China’s high-end manufacturing and export sectors are driving growth, buoyed by demand from various industries.

Chinese leaders have set a modest economic growth target for this year, reflecting the cautious approach amid global uncertainties.

Morgan Stanley predicts that China is on track to meet its economic targets, with oil prices and global supply chain stability playing crucial roles in shaping the future trajectory.