China's two-speed economy stays intact

Beijing

CHINA's economic rebalancing remained intact as the first economic reports of 2016 signalled that manufacturing weakened for a fifth straight month, the longest such streak since 2009, while a gauge of services rose to the highest level in more than a year. The official purchasing managers index (PMI) edged up to 49.7 last month from a three-year low of 49.6 in November, the National Bureau of Statistics (NBS) said last Friday. The Caixin China Manufacturing PMI index released on Monday showed a drop to 48.2 last month from 48.6. Both factory gauges were less than the median estimates in Bloomberg surveys. The official non- manufacturing PMI, rose to a 16-month high of 54.4. Numbers below 50 indicate deterioration.

The benchmark China stock index tumbled almost 7 per cent and the yuan slumped after the signs of further weakness in manufacturing, a reflection of sliding exports thanks to sluggish growth abroad, and of overcapacity at home.