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China's Manufacturing PMI Increases Despite Decline in June's New Export Orders | Insights

By YUTING CHEN|Jul 04,2024

Chongqing - In June, the Caixin China General Manufacturing Purchasing Managers' Index (PMI) reported a fifth consecutive rise in the manufacturing production index, with the overall PMI at 51.8, up 0.1 points from the previous month. This indicates accelerated manufacturing production and operations.

PMI is a survey-based indicator that measures the health of a country's manufacturing sector by assessing factors like new orders, production levels, and employment trends.

China's recent foreign trade report for the first five months revealed a 6.3% year-on-year increase in the total value of goods imports and exports, with exports rising by 6.1%. However, the June new export order index growth rate dropped to a six-month low, indicating a slight weakening in overseas market demand.

In an exclusive interview with Bridging News, Ma Xiaoyan, Director of the Institute of International Economics, Trade, and Logistics at the Chongqing Academy of Social Sciences, they attributed the drop in the new export orders index to a mismatch between industry sample distribution in the PMI survey and this year's actual export distribution across industries.

In the PMI, sectors such as electrical machinery, computer communications electronics, and ferrous metal smelting and processing carry substantial importance. Ma pointed out that these sectors have seen year-on-year declines in exports this year.

In contrast, industries like railways, aviation, ships, transportation equipment, metal products, and general equipment have exhibited strong export growth. However, their limited representation in the PMI has contributed to a decline in the new export orders index.

Guoyuan Port. (Photo/Chen Lixing)

Ma emphasized that China's foreign trade exports to traditional Western markets face substantial constraints and challenges due to slowing economic growth, weak demand, and inflation. For instance, the EU's reduced demand for Chinese products amid an energy crisis and economic slowdown has particularly affected the machinery and transport equipment sectors.

Simultaneously, ASEAN, Latin America, BRICS countries, and other trade partners have demonstrated robust demand, partially helping to compensate for the shortfall of demand from traditional developed economies.

Countries like Singapore, Malaysia, and Thailand, key manufacturing hubs in ASEAN, have experienced notable growth in China's machinery, electronics, new energy products, chemicals, and automobile exports.

ILSTC achieves half-year target 16 days ahead

The New International Land-Sea Trade Corridor (ILSTC) enhances China's exports to ASEAN by providing efficient rail-sea intermodal transportation routes that facilitate trade connectivity and efficiency, and reduce logistics costs.

In 2024, the ILSTC rail-sea intermodal trains successfully transported 5,000 trains, equivalent to a cargo volume of 250,000 TEUs.

Ma highlighted that this accomplishment not only achieved the half-year target 16 days ahead of schedule but also established a strong foundation for the strategic goal of 10,000 trains for the entire year.

A cross-border train carrying 40 containers of chemical raw materials recently departed Chongqing, passing through Laos and Thailand, and is expected to reach Malaysia in nine days. At the same time, a train from Malaysia loaded with agricultural products and daily necessities from ASEAN countries left for Chongqing, with an expected arrival time of nine days.

The official launch of the Two-Way Departure for China, Laos, Thailand, and Malaysia Cross Border Railway Express Along the ILSTC. (Photo/Zheng Ran)

This signifies the commencement of the China-Laos-Thailand-Malaysia cross-border train route by ILSTC, which will link China's western regions with ASEAN countries to enhance trade and industrial cooperation.

In 2024, there has been significant growth in imports of goods like Australian lithium ore and Southeast Asian rubber. By the end of May, the ILSTC expanded its transported goods to 1,154 types, spanning 18 provincial regions, including 72 cities and 152 stations across China.


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