The growth rate of China's manufacturing industry reached a new low in June, and the bank money shortage had a big impact

The growth rate of China's manufacturing industry hit a new low in June, and the bank money shortage had a big impact. The New York Times reported that two surveys released by Chinese officials on Monday showed that China's manufacturing industry in June...

The New York Times reported that two official surveys released by Chinese officials on Monday showed that China's manufacturing industry continued to slow down in June, which has intensified people's concerns that China's economic growth momentum may continue to decrease in the coming months.

An index released by the China Bureau of Statistics showed that factory activity barely expanded in June, a month when China was deeply affected by a credit crunch in the banking system.

The officially released purchasing managers’ index (PMI) was 50.1, slightly higher than the 50 that divides expansion and contraction, but significantly lower than the 50.8 in May.

Another Purchasing Managers Index survey released by HSBC in the UK showed that the index was 48.3, which also showed a significant decline compared with 49.2 in May. The June index was the lowest in nine months and was slightly lower than the preliminary index released on June 20.

Overall, the two surveys showed that a gradual slowdown that began earlier this year has continued as the Chinese government avoids increasing stimulus measures and is eager to get the economy out of the predicament of excessive credit expansion.

In recent months, policymakers have made clear that they are prepared to tolerate lower growth as they transition the economy from the breakneck expansion of past decades to higher-quality, more sustainable growth.

A cash shortage in the commercial banking system last month has further highlighted this, as Beijing fosters more cautious banking activity by taking tough measures on lending.

The central bank last month allowed interbank lending rates to reach a record high, sending a stern message to the banking industry that it needs to strengthen risk controls and improve capital management.

While analysts said the move would be positive in the long term if it could help introduce more discipline on borrowing, the cash shortage sent stock prices tumbling as investors worried about the impact of tougher lending on an already cooling economy.

Lending rates fell last cycle and continued to fall on Monday. The benchmark Shanghai Stock Exchange Composite Index, which fell 14% in June, calmed down over the past few days and recovered 0.8% on Monday. However, these manufacturing surveys re-emphasize concerns that China's growth remains fragile, which will put pressure on other emerging economies in Asia.

Purchasing managers' indexes for several other Asian countries released simultaneously by HSBC on Monday highlighted this: the indexes in Indonesia and South Korea fell in June, and although those in India and Taiwan increased slightly, they were still at low levels. Qu Hongbin, chief China economist at HSBC, said in comments accompanying the release of the data that the recent cash shortage in China's interbank market may slow down the expansion of off-balance sheet financing and further worsen the financing environment for small and medium-sized enterprises.

He added, "Slowing growth is likely to continue in the coming months as Beijing avoids the use of stimulus measures."