Sept 30, V7N - China's factory activity continued to decline in September, marking the fifth consecutive month of contraction, while the services sector also experienced a significant slowdown. This trend raises concerns about the need for additional stimulus measures to meet Beijing's growth target for 2024, especially with only three months remaining in the year.The National Bureau of Statistics reported that the purchasing managers' index, or PMI, rose slightly to 49.8 in September from 49.1 in August. However, this figure remains below the critical 50-point threshold that indicates growth, although it surpassed the median forecast of 49.5 from a Reuters poll.

This reading is the highest recorded in five months.Accompanying this data, a private-sector Caixin survey also indicated ongoing struggles within China's manufacturing sector, prompting policymakers to acknowledge "new problems" in the economy and call for more robust stimulus efforts. In response, the central bank and top financial regulators announced significant measures, including a directive for banks to reduce mortgage rates for existing home loans by October 31.

The non-manufacturing PMI, which encompasses services and construction, fell to 50.0 from 50.3 in August, marking its lowest level in 21 months. The services PMI dropped to 49.9, indicating its first contraction since December of the previous year, while the construction PMI saw a slight increase to 50.7.To address these economic challenges, the Chinese government plans to raise 1 trillion yuan, approximately $142.56 billion, through special bonds aimed at enhancing subsidies for consumer goods and upgrading business equipment. Additionally, another 1 trillion yuan will be raised through separate debt issuance to assist local governments with their debt issues.

As the property market downturn continues to hinder broader economic recovery, top leaders have called for measures to stabilize housing prices. Major cities like Shanghai and Shenzhen are set to lift key home purchase restrictions in the coming weeks, joining a growing list of smaller cities that have already done so.Analysts believe that the new stimulus measures, along with a fiscal package estimated at around 2 trillion yuan, should be sufficient to achieve the government's growth target of approximately 5%. However, challenges such as weak demand and a difficult global trade environment remain pressing concerns for the Chinese economy.

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