China Manufacturing May Shrink Further on Global Slowdown, H

China’s manufacturing may contract for a second month, preliminary data for a purchasing managers’ index indicated.

The gauge was 49.8 in August after a final reading of 49.3 for July, HSBC Holdings Plc and Markit Economics said in a statement today. The final August reading is due Sept. 1. A reading below 50 indicates a contraction.

Faltering U.S. and European growth and a deepening debt crisis in the euro zone have triggered a four-week rout that’s wiped out more than $8 trillion in global equity values. China, which is slowing after the government raised interest rates and curbed lending to cool inflation, will avoid a hard landing, Vice President Xi Jinping told U.S. and Chinese business executives last week.

“China is on track for a soft landing despite the external risks, with accelerating inland growth and investment in public housing and new projects,” Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, said before the announcement.

HSBC’s preliminary index, known as the Flash PMI, is based on 85 percent to 90 percent of responses to a survey of executives in more than 400 companies.

The preliminary number has matched the final reading twice since HSBC began publishing the series in February. The final reading fell below 50 in July for the first time in a year. The official manufacturing index released by the statistics bureau and the China Federation of Logistics and Purchasing had a reading of 50.7 in July.
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