Dip in Chinese economy prompts regional shares to fall

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Credit to Ministério das Relações Exteriores (Flickr)

The world’s second largest economy has today shrunk at its fastest rate in six and a half years. A once booming Chinese manufacturing sector has announced that it is now in fact shrinking, causing Asian stock markets to fall throughout the continent.

The preliminary Caixin manufacturing purchasing managers’ index, otherwise known as PMI, fell to 47 this month, down 0.3 from August. This sits below forecasts of 47.5, and as the PMI reading is below 50, this is indicative of a contraction in the sector.

This is seventh month in a row that the manufacturing sector has been shown to be contracting, raising fears that the Chinese economy is shrinking at a greater rate than we are led to believe. Recent surveys of purchasing managers have revealed that factories across the nation were cutting output, prices and jobs, whilst orders have now fallen to a four-year low.

These revelations coincide with Chinese president Xi Jinping’s visit to the US, where he has spoken out to reassure the world that his countries colossal economy is under control.

Nearby nations such as South Korea have seen their Kopsi index, which measures all common stock traded both in and out of the country, end 1.9% lower than it stood before Chinese data was released, prompting new doubts of economic stability throughout the region.

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