A series of difficult problems are still weighing on China's economy.

China's manufacturing activity shrank for a second straight month in May 2023, the latest sign that the giant economy is losing momentum.

China's economy shows signs of losing momentum. (Photo: Tomoko Wakasugi)

China's official manufacturing purchasing managers' index (PMI) - a key gauge of factory output - fell to 48.8 in May, below the 50-point mark that separates growth from contraction, the National Bureau of Statistics (NBS) said.

The figure followed a decline of 49.2 in April 2023, reversing a three-month growth trend and falling short of the median estimate of 49.5 from economists surveyed by Bloomberg News.

In addition, official data released on May 28 also showed that profits of industrial enterprises in China fell sharply in the first four months of 2023. Companies continued to struggle with pressure on surplus profits amid weak demand as the economy did not recover as strongly as expected.

According to data from the National Bureau of Statistics of China, industrial profits fell 20.6% in the first four months of this year compared to the same period last year. In April alone, the decline was 18.2% after falling 19.2% in March.

The decline in the PMI shows that the economic recovery is facing challenges, said Zhiwei Zhang, chairman and chief economist at Pinpoint Asset Management.

Mr. Zhang also said that the cooling real estate market and the emerging second wave of Covid-19 have weakened domestic demand.

China's economy grew 4.5% in the first quarter of 2023, as the country reopened after a period of strict health control measures to prevent the epidemic.

However, a host of intractable problems are weighing on the world's second-largest economy, including a debt-laden property sector, weak consumer confidence and the risk of recession in other economies.

China is also struggling to cope with the Covid-19 outbreak, but there is little sign that tightening policies will be reintroduced.

Source: https://baoquocte.vn/loat-van-de-nan-giai-van-dang-de-nang-len-kinh-te-trung-quoc-229146.html