Communist China’s Production Shrinks and Economy Trembles

The Purchasing Managers’ Index (PMI) showed that Communist China’s manufacturing PMI fell to 49% in July due to a drop in activity, according to data released by the country’s National Bureau of Statistics and China Federation of Logistics & Purchasing (CFLP) on Sunday, which adds to the pressure on the struggling economy comes in a politically sensitive year when Xi Jinping is trying to extend his term in power.

Factory activity in Communist China has been subdued as weak global demand and containment measures to curb the spread of the virus have limited domestic consumer spending.

The monthly purchasing managers’ index released by China’s National Bureau of Statistics and CFLP fell to 49 from 50.2 in June. The index is on a 100-point scale, with a lower than 50 indicating declining activity. Sub-indices such as new orders, exports and employment all fell.

The production index fell to 49.8 from 52.8 in June, new orders fell 1.9 points to 48.5, and new export orders fell 2.1 points to 47.4.

Output in April-June shrank from the previous quarter, and the Chinese Communist Party (CCP) has stopped talking about its official economic growth target of 5.5 percent this year.

Economists believe that mainland China’s economy is under great downward pressure. The economic slowdown raises the risk of politically unstable job losses, and Beijing faces more challenges ahead of the CCP’s 20th Party Congress scheduled in October.