China's factory activity shrinks for 5th month

A worker checks on a cargo train wheel at the GEMAC Engineering Machinery, a China-based company, during a media-organized tour in Xiangyang in central China's Hubei Province, May 10, 2023. [AP Photo]

China's manufacturing activity contracted for a fifth straight month in August, but at a slower-than-expected pace, an official factory survey showed on Thursday, maintaining pressure on Beijing to step up policy support for the stuttering economy.

The official purchasing managers' index (PMI) rose to 49.7 from 49.3 in July, according to the National Bureau of Statistics, staying below the 50-point level demarcating contraction from expansion. The reading was above a forecast of 49.4.

The Chinese economy risks missing Beijing's annual growth target of around 5% as it contends with a worsening property slump, weak consumer spending and tumbling credit growth, leading major banks to downgrade their growth forecasts for the year.

Beijing on Sunday announced halving the stamp duty on stock trades, the first cut to the tax since 2008, to boost investor sentiment.

Detailed rules were also unveiled on Friday to ease first-home mortgages. And some Chinese state-owned banks will soon lower interest rates on existing mortgages.

The fresh moves came after a raft of measures aimed at reviving big-ticket purchases, notably of new-energy vehicles.

Still, many analysts see only a slim chance for any drastic stimulus amid concerns over mounting debt risks. The official non-manufacturing PMI fell to 51.0 from 51.5 in July, while the composite PMI, including both manufacturing and non-manufacturing activity, rose to 51.3 from 51.1.