Despite all the efforts made by the Chinese government to support the economy, there was observable weakening in processing industry activity.
The PMI calculated by the Markit Economics increased from 48.9 in April to 49.2 exceeding the forecast by 0.1. However, as the value is below 50, it means contraction of manufacturing activity in comparison to the previous month.
“The headline PMI signaled a further deterioration in the health of China's manufacturing sector in May,” Annabel Fiddes, an economist at Markit, said. "Sustained job cuts, ongoing destocking activities and reduced purchasing activity all suggest that the sector may remain in contractionary territory as we head into mid-year."
The efforts of Chinese authorities have not yet received an adequate response from the processing companies. At the same time, a statement made by the Chinese State Council, the Ministry of Finance and the People’s Bank of China guaranteed continuing investments into local authorities’ projects even when some of them are unable to redeem their debts. This is not in compliance with the previously stated government’s plans to reduce the region's’ debts to reasonable levels. These debts now amount to 22 trillion yuan (3.5 trillion dollars).
