Despite the slight falls in interest rates and other stimuli granted by the authorities in recent weeks, the PMI index, which measures economic activity in the manufacturing sector, remains in contraction, at 49 points in June. As for the service sector, it is slowing down to 53.2 per cent.
The composite PMI for China now stands at 52.3 percentage points and thus signals a moderately buoyant economy.
Released just days after the Chinese Prime Minister confirmed that the economy is well-positioned to achieve a growth target of 5.0% for the current year, these figures suggest that the Beijing authorities are preparing to increase support measures.
This is all the more so since they missed their growth target in 2022. They will not want to repeat the experience under the pain of losing face, which would be frowned upon in the country. In addition, they have considerable leeway to do so.
Beyond the exact timing of the recovery, China has tremendous potential.
It is, therefore, very likely that investors' patience will eventually prove profitable and that, if it is sluggish, the long-awaited recovery of the world’s 2nd economy will ultimately take.
We remain investing in China as part of a diversified portfolio.