News — ChangeLab

Change in demand for commodities in China. What will the PMI decrease lead to?

China's business activity index (PMI) had fallen from 51.9 to 49.2 by early May, falling below the 50-point threshold for the first time since last December. Experts note that this situation indicates an uneven economic recovery in the country. Falling PMI in China may affect imports of commodities, as well as lower manufacturing activity.

Such changes in the Chinese economy can lead to uneven demand for commodities, including critical sectors such as manufacturing, construction and infrastructure. For example, despite an 8.8% year-over-year increase in direct investment in infrastructure in the first quarter, the percentage of deposits in real estate nevertheless declined by 5.8%.

Hence, many experts have a question - if the development of production, construction and infrastructure is uneven, then what is the source of China's economic growth at the moment?

In our opinion, one of the important factors in maintaining economic growth in China is retail spending. Although they do not support demand for steel and copper, they nevertheless stimulate demand for many energy sources, such as gasoline, jet fuel and coal for power generation. Therefore, considering all the indicators and experts' forecasts for the last two months, it should be said that China's commodity imports are still patchy, but the government is still finding ways to keep China's economic growth stable after the crisis.