The Chinese manufacturing activity fell to 8-month low in November according to the latest government data, sparking a new debate on the prospects for the second largest economy in the world. The index of manufacturing activity declined to 50.3 points from 50.8 points in October. The level was the lowest since March and below the market forecast for a level of 50.5 points. Any result above 50 indicates expansion, while levels below that indicate a contraction in activity.
The slowdown in manufacturing activity continues to weigh on economic growth. The strong influence has the real estate sector, which together with the related activities are expected to constitute about 20% of total GDP. In recent quarters, he was pressured by oversupply and weakening demand. The figures released last month confirmed the weak market conditions in the sector. Prices of new homes fell in 69 of the 70 biggest Chinese cities in September.
Beijing authorities have taken steps to alleviate the market, including by loosening restrictions on mortgage and reduce interest rates for the first time in more than two years. However, economists fear that the market will continue to weigh on economic growth for years to come. In a recent analysis was stated that a major problem in the real estate sector, the growth of new buildings still outstrips demand. In their words, until this trend continues, Chinese economic growth will rise even as a result of cuts in interest rates.