April 2, 2023

China Manufacturing Contracts to Lowest Level in 9 Months

HONG KONG — Manufacturing output in China has been contracting worse than economists expected in June, a closely watched survey showed on Thursday, challenging Beijing’s stated goal of driving growth through economic overhauls rather than resorting to more more lending to stimulate the economy.

A preliminary survey of purchasing managers for the month of June showed that output in China has fallen to its lowest levels in nine months, as manufacturers cut back production at a faster pace in response to slack demand both at home and overseas.

The preliminary Purchasing Managers’ Index, or P.M.I., published by HSBC and compiled by Markit, dropped to 48.3 points as of the first three weeks of June, its lowest level since last September and down markedly from 49.2 in May. A reading above 50 indicates growth, and anything below that level signals contraction.

“Manufacturing sectors are weighed down by deteriorating external demand, moderating domestic demand and rising destocking pressures,” Qu Hongbin, HSBC’s chief economist for China, said in a statement accompanying the survey results.

“Beijing prefers to use reforms rather than stimulus to sustain growth,” Mr. Qu said. “While reforms can boost long-term growth prospects, they will have a limited impact in the short term.”

Markets fell Thursday on news of the survey data. In Hong Kong, a subindex of shares in mainland Chinese companies was down more than 3 percent at noon — outpacing declines on the broader Hang Seng index, which had fallen 2.5 percent and was one of the worst performers in the Asia-Pacific region.

China’s slowing economy is posing a challenge for Prime Minister Li Keqiang, who took office in March and has said he plans overhauls targeting sustainable growth — as opposed to relying on loose credit from statecontrolled banks, which helped the country rebound strongly in the years since the 2008 financial crisis.

Data released earlier this month showed that China’s economic performance had worsened in May, with industrial production dropping to its lowest growth rate since last September, imports and fixed-asset investment having their weakest growth since last August, and producer prices continuing to accelerate downward, having declined every month for 15 months in a row.

On Wednesday, economists at HSBC joined counterparts at several other banks in slashing their growth forecasts for the Chinese economy this year. HSBC said it now expected gross domestic product to expand 7.4 percent in 2013, down from a previous forecast of 8.2 percent.

Such downgrades raise the risk that China’s growth could fall short of the government’s official target of 7.5 percent growth this year.

Louis Kuijs, an economist at Royal Bank of Scotland and former China economist at the World Bank, wrote Thursday in a research note that Beijing’s response to the new preliminary P.M.I. survey was unlikely to be dramatic.

“Policy makers would want to see this weakness confirmed by the official P.M.I. and hard activity data before making bold decisions,” Mr. Kuijs said. “Nonetheless, this kind of data will test the resolve of the government to maintain its current relatively firm macro policy stance.”

Article source: http://www.nytimes.com/2013/06/21/business/global/china-manufacturing-contracts-to-lowest-level-in-9-months.html?partner=rss&emc=rss

DealBook Column: For Pawlenty as Wall Street Lobbyist, an About-Face May Be Needed

Tim Pawlenty, who will lead the Financial Services Roundtable, giving a speech during the Republicans' convention last month.Damon Winter/The New York TimesTim Pawlenty, who will lead the Financial Services Roundtable, giving a speech during the Republicans’ convention last month.

“I went to Wall Street and told them to get their snout out of the trough because they are some of the worst offenders when it comes to bailouts and carve-outs and special deals.”

That was Tim Pawlenty, the former Republican governor of Minnesota, just over a year ago while running for president, railing against big banks.

So what’s he up to now?

DealBook Column
View all posts

Last week, he was named president of the Financial Services Roundtable, one of Wall Street’s most influential lobbying organizations. In his new job, in which his predecessor was paid $1.8 million annually, Mr. Pawlenty will spend his days shuttling around Washington, trying to convince lawmakers that those “carve-outs and special deals” really are beneficial for the nation’s banking system, though presumably without putting his “snout in the trough.”

To say that the choice of Mr. Pawlenty to represent the banking industry is odd would be an understatement, but his appointment is the clearest sign yet of the flexible ethic that makes the revolving door in Washington spin faster.

Consider many of Mr. Pawlenty’s previously espoused views, which are likely to need to change when his new job begins in November:

Mr. Pawlenty has repeatedly said he was against the bank bailouts that some say helped save many of the member firms of the lobbying organization he just joined. “I don’t think the government should bail out Wall Street or the mortgage industry or for that matter any other industry,” he told Fox News in January 2011 when questioned about his final position on the matter, which appeared to shift at times.

Last summer, when the banking industry — and the Financial Services Roundtable, specifically — was lobbying Washington to raise the debt ceiling to avert a default, Mr. Pawlenty was taking a different tack.

Jamie Dimon of JPMorgan Chase had called a potential default “catastrophic.” Mr. Pawlenty’s view? “Well, we don’t know that,” he said when asked on MSNBC about the many dire predictions of the fallout of a default. He suggested that Republicans play chicken with the Democrats, questioning the very premise that the country was on the verge of default. “I hope and pray and believe they should not raise the debt ceiling,” he told voters in Iowa.

And while Wall Street may like — some say love — the Federal Reserve chairman, Ben S. Bernanke, Mr. Pawlenty has a starkly different view.

“I opposed his appointment last time, so it wouldn’t be hard for me to oppose his reappointment next time, and I don’t think he should continue in that position,” he told CNBC in June 2011.

And then there is his public view of President Obama, who, depending on which poll you believe, has a chance of still being president and regulating the industry that Mr. Pawlenty now represents. “President Obama isn’t as bad as people say, he’s actually worse,” Mr. Pawlenty declared at the Republican National Convention as national co-chairman of Mitt Romney’s presidential campaign. He is leaving that post to take the new job. Now, in his new role representing the banking industry, there are even odds, if not better, that Mr. Pawlenty will have to work with an Obama administration. Those will be some fun meetings.

So how exactly was it that Mr. Pawlenty, who has no financial industry background, got the job?

He declined to comment for this column.

Despite Mr. Pawlenty’s thinking on certain Wall Street issues, he has become a banking favorite over the last two years, speaking out against government regulation, and in particular, President Obama. According to Open Secrets, the top five donors to his presidential run, grouped by company, were Goldman Sachs, Moelis Company, Wells Fargo, Capital Group Companies and Morgan Stanley. In total, he raised just over $5 million. His name recognition alone will most likely open doors in Congress, which, in the world of lobbying, is half the battle.

Steve Bartlett, the current president of the Financial Services Roundtable, who will be retiring and handing over the reins to Mr. Pawlenty, said he believed his successor was “a consensus builder,” with “integrity” and was “bipartisan.” He paused for a moment before acknowledging that “bipartisan certainly isn’t the first word to come to mind” given the last two years ahead of the presidential election, but that Mr. Pawlenty is “bipartisan-minded.” He said that “this is not a selection about who is going to be in office in the next four years.”

He also pointed out that, with some important exceptions, “the fact is that the issues we deal with typically don’t get up to the presidential level.” (That may be true of lobbying that goes on for small amendments, but the overhaul reforms of Wall Street that were recently passed and many of which still must be enacted are on the radar of the White House, if they are not indeed driven by it.)

Before getting too far into the conversation, Mr. Bartlett warned that he was not intimately involved in the hiring process. “I was N.I.F.O. — nose in, fingers out.” He described a rigorous hiring process, saying that more than 100 people had been considered for the job and at least 30 people were interviewed.

When I asked how he felt about Mr. Pawlenty’s comments about the bailouts, which seem at odds with his organization, he said: “Our views are totally consistent. I don’t find those views to be at odds.”

But then he said, “different time, different context.” He continued by describing Mr. Pawlenty as “a guy sitting outside the Beltway,” who had the luxury and freedom to say how he felt.

How about Mr. Pawlenty’s views on Mr. Bernanke?

“I haven’t heard Tim Pawlenty on that,” he said.

And what about Mr. Pawlenty’s views of defaulting on the debt ceiling?

“In Washington there is an old saying, ‘Where you stand depends on where you sit.’ ”

Sadly, no truer words have ever been said about the influence of money on our nation’s capital.

Article source: http://dealbook.nytimes.com/2012/09/24/about-face-for-bankers-new-lobbyist/?partner=rss&emc=rss