In another sign that China's booming economy may be slowing, the country's manufacturing sector contracted in June after facing a credit crunch and seeing a decline in orders from Europe and the U.S., a survey said.
For the second straight month, the HSBC purchasing managers index for China stood below 50 points, which indicates a decline in manufacturing as export demand dropped and domestic consumption failed to make up the difference.
That decline has many countries nervously watching to see whether it will have broader implications on the global economy.
China is the world’s largest exporter and the largest or second-largest trading partner for 78 countries, so any slowdown has global consequences, said Ferdinando Guerra, an economist specializing in international trade at the Los Angeles County Economic Development Corp.
Guerra said the reduction in manufacturing illustrates how integrated the international arena has become. He largely blames China’s manufacturing cuts on reduced demand from Europe’s struggling economies. That in turn has pushed down demand for raw materials and components from countries such as Brazil, South Korea and Taiwan.