Chinese factories demonstrate resilience amid danger from Trump's levies

Chinese factories demonstrate resilience amid danger from Trump's levies

In August, China’s official factory gauge suddenly strengthened, thus indicating some resilience as the Chinese economy braces for an escalation of the trade conflict with America.

In August, the manufacturing purchasing managers index kept to 51.3 versus July’s reading of 51.2. What’s more, it surpassed the estimate of 51 in a Bloomberg poll of market experts. Additionally, the non-manufacturing PMI that covers construction and services rallied to 54.2, as the statistics bureau informed on Friday, versus July’s reading of 54. Levels above 50 stand for improvement.

With America already lifting duties on $50 billion of China’s products, such strength might prove difficult to sustain, while duties on another $200 billion might be slapped next week.

On Thursday, China announced that it’s on the verge of exempting foreign institutions from paying some taxes on interest profits in the onshore bond market in an attempt to back the national economy. The exemption was announced after a State Council gathering headed by Premier Li Keqiang covered value-added and corporate income taxes for a period set at three years.

In July, the reading for smaller manufacturers tacked on to 50 having stayed in the deterioration zone for up to three months. It definitely highlighted that major bank policies to back that crucial part of the Chinese economy might be helping to back confidence. Moreover, the reading for larger companies slumped for a third month, although it was still at a firm value of 52.1.

Risks to external demand from the trade clashes showed up in the data, pointing to the uncertainties for the country’s factories. US leader is on the verge of moving ahead with his intention to slap duties on $200 billion on China’s products as soon as a public-comment period ends next week.

 

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