BEIJING — China’s manufacturing sector is not picking up as many producers had hoped, according to figures released on Thursday.
New data made public by the China Federation of Logistics and Purchasing indicates that manufacturing in November declined for the first time in nearly three years. The numbers showed not just a lower increase in production, but an actual decrease, a warning signal that the country’s credit crunch, labor costs and other issues have taken a serious hit on China’s production industries.
“It’s very difficult to do anything right now, and all the companies are focused on just staying in business,” Hong Weiwin, marketing director for a textiles producer in Dongguan, said in a telephone interview. “Many factories in the region have closed down already.”
The federation said the China’s Purchasing Managers’ Index was down 1.4 points from October to November, underscoring the ongoing slide of the world’s workshop. The new level marked the lowest point since February of 2009.
Since the global economic crisis took hold in 2008, China has struggled to maintain its manufacturing industries, never reaching the same level of the pre-crisis days when orders from the United States and Europe were seemingly endless. In addition to declining demand, China now has higher labor costs, worker shortages in the factory zones and severely tightened credit that affects smaller companies’ ability to buy raw materials and produce.
On Wednesday, the central bank of China addressed the credit crunch increasing by 0.5 percent the amount that banks have to keep on hand rather than lending. The bank had been using reserve rates to try to handle too-fast economic growth and inflation, but repeated increases in the ratio helped create the credit crunch that has stifled production.
In the Pearl River Delta, where thousands of factories are reportedly operating at much slower rates or have closed all together, producers are wondering what comes next. Textile and garment makers in particular don’t expect aid from the government, which is intent on scaling China’s manufacturing up on the value chain.
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