Chinese manufacturing falls at year’s end

The HSBC purchasing managers’ index (PMI) for China fell to 48.7 in December, below the critical 50 mark that indicates a contraction.

But the data was less sharp than November’s 47.7 level, leading some experts to think Chinese manufacturing could be stabilising.

While much of the world has been depending on Chinese growth to pull the economy out of a global slowdown, Thomas Becket, chief investment officer of PSigma Investment Management warned the region was unlikely to counteract a crisis in developed markets.

“Recent trade data from some of the export-focussed economies have been suggestive of a more macabre economic slowdown than many had originally expected,” he said.

“Indeed conditions have deteriorated sufficiently during recent months in China that the inflation-obsessed authorities there have been forced to start loosening their grips on credit creation, in order to try to allow economic growth to pick-up once again.”

China’s benchmark Shanghai Composite index is down 22 per cent in 2011, at it’s lowest level since 2009, but the index was up 1.19 per cent, to 2,199.42 at 10:20 in London.

Hong Kong’s Heng Seng index also advanced 0.2 per cent, to 18,434.40.