There Is Still No Bottom for China’s Economy

Some familiar problems haunted China’s economy in August: power shortages, the housing market implosion and collateral damage from “zero-Covid” policies. The latter two are fundamentally political as well as economic, but the will to tackle them seems lacking so far. That makes another step down in Chinese growth this fall likely.

China’s official August purchasing managers indexes, released Wednesday, were bad but not catastrophic. Factory activity weakened again, but less significantly than in July. The new orders subindex rose slightly while the output index remained flat at 49.8, likely reflecting the impact of widespread hydropower shortages. Meanwhile the construction and services PMIs ticked lower—although both still remained above the 50-point mark separating expansion from contraction.

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