Doubts as China’s growth slows

The official purchasing managers’ index (PMI) fell to 50.6 in April from an 11-month high in March of 50.9. Analysts had expected the April PMI to be 51.0.

The pull-back on the official PMI mirrored a similar decline in a preliminary HSBC PMI last week, suggesting China’s exports engine faces headwinds from the eurozone recession and sluggish growth in the United States.

China’s new government has signalled it will step up infrastructure investment, which analysts said will provide support for the economy in the second quarter.

“Overall, my general feel is that China is growing but slower than people expected say a month ago,” said Alvin Pontoh, economist at TDSecurities in Singa-pore.

“But I don’t think this is reason for alarm... this is probably what the new administration is looking for.

“Structurally, China cannot grow at 9 or 10 per cent anymore, so over the next few years, you’d reasonably expect growth to edge lower to say 7 per cent or so.”

A string of global data, including lower than expected US economic growth figures, has dented optimism seen at the start of the year that the world economy was picking up.

Market reaction to the PMI was muted as many countries in Asia and Europe were marking May 1 Labour Day holiday. China’s markets were closed and were reopening today.