According to China’s political calendar, big decisions about economic policy this year are supposed to wait until the autumn, when a major meeting of the Communist party brings together the country’s top leaders.
But a deteriorating economic landscape, highlighted by a new survey of industry, could overwhelm the political calendar and test the new government’s resolve to refrain from deploying short-term fixes for sluggish growth.
The purchasing managers’ index for the manufacturing sector is on track to fall to a seven-month low of 49.6 in May from 50.4 in April, according to a preliminary survey published by HSBC. The decline was worse than expected and, in dropping below the index’s midpoint of 50, it signalled that China’s industrial activity had started contracting.