10/02/2015, 00.00
CHINA
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Beijing, industrial production falls to 2009 levels

The sector was once the workhorse of the entire national economy. Now the central government wants to change its growth model, abandoning the heavy industry and exports to support the services sector and domestic consumption. But the transition will not be painless.

Beijing (AsiaNews /) - Industrial activity in China has slumped to its lowest levels for six years now (2009), while the services sector seems to be stalling. Private indicators published yesterday confirm the fears: the slowdown of the Chinese economy now seems not only unstoppable, but even faster than expected.

For the second consecutive month in September the manufacturing sector contracted: PMI data halted at 49.8 against 49.7 in August 2015. Any index below 50 indicates a contraction.

Although the figures are slightly better than market expectations, the latest reading suggests that the general conditions of the Chinese economy are now deteriorating completely. It also reinforces the belief in the markets that Beijing will eventually resort to stimulus measures, to prevent a more marked slowdown.

Analysts were expecting the index to touch 49.6 (the weakest level since August 2012), in response to falling demand at home and abroad. This decline has left many companies without orders and halted purchasing and sale of raw materials (iron ore and copper) needed for the production of the petrochemical industry.

Many economists expect a gradual economic slowdown and give credit to the central government's attempt to replace the old model - based on heavy industry and exports - with a new, more flexible system based on services and on increasing domestic consumption.

However, as even the Premier Li Keqiang admitted on several occasions, this transition will not be painless. And given the enormous social problems of the country - caused by unemployment, pollution, corruption and food scandals - a drop in employment could cause a political earthquake in a position to bring down the Party.

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