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The
official purchasing managers' index (PMI) likely fell to 49.1 in
February from January's 49.2, according to the median forecast
of 33 economists in the poll. The 50-point mark separates growth
from contraction.
Economists appear in agreement that the economy is still largely
struggling for traction despite some signs of green shoots in
December's trade data and new bank loans hitting an all-time
high in January, with the highest forecast a lone 50.0.
China's disappointing post-COVID recovery has raised doubts
about the foundations of its economic model and stoked
expectations policymakers will need to consider reforms, as
consumers hold off spending, foreign firms divest, manufacturers
struggle for buyers, and local governments contend with huge
debt burdens.
Policymakers have pledged to roll out further measures to help
shore up growth after the measures implemented since June had
only a modest effect, but analysts caution Beijing's fiscal
capacity is now very limited.
To prop up faltering growth, the People's Bank of China cut the
reserve requirement ratio (RRR) for banks by 50 basis points on
Feb. 5, the biggest in two years, releasing 1 trillion yuan
($139.0 billion) in long-term liquidity.
China's President Xi Jinping last week chaired a meeting of a
key economic policy-making body on supporting manufacturers
through equipment upgrades and lowering logistics costs, part of
his push to rebalance the economy by harnessing technology to
bring about productivity gains and income increases.
Many analysts worry that China may begin flirting with
Japan-style stagnation later this decade unless policymakers
take steps to reorient the economy towards household consumption
and market-allocation of resources.
Beijing's decision to divert financial resources from its ailing
property sector to manufacturers rather than households has
raised overcapacity concerns among Western trade partners.
The official PMI will be released on Friday. The private Caixin
factory survey will also be issued on Friday, and analysts
expect its reading to edge down to 50.6 from 50.8
($1 = 7.1948 Chinese yuan renminbi)
(Reporting by Joe Cash; Polling by Devayani Sathyan and Veronica
Khongwir in Bengaluru; Editing by Muralikumar Anantharaman)
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