Chinese Manufacturing Activity contracts again in December

Chinese manufacturing activity continuous to contract in December as well as the Purchasing Managers- Index (PMI), an important parameter to judge the performance of manufacturing sector, stood at 48.7 in December. Any reading lower than 50 indicates contraction.

The drop in manufacturing activity was mainly due to lower export demand from the western developed nations amid the current global slowdown and the euro zone debt crisis. China-s tight monetary policy has also affected the manufacturing activity in recent times and was an important reason for the drop.

With easing inflation, China-s central now may cut interest rates in order to boost economic and industrial activity in the country. China-s GDP growth is expected to fall below 9% during the current quarter due to lower industrial and economic activity.