Beijing: China's manufacturing growth slowed for the first time in five months in December as Premier Wen Jiabao's government tightened monetary policy and chased energy-efficiency and pollution targets.
The Purchasing Managers' Index fell to 53.9 from 55.2 in November, the China Federation of Logistics and Purchasing said in an e-mail. That was less than the median estimate of 55 in a Bloomberg News survey of 13 economists. A measure of manufacturers' input costs also fell.
Wen is seeking to choke off the fastest inflation in more than two years and limit asset bubbles without undermining growth in the economy that led the recovery from the global financial crisis. Governor Zhou Xiaochuan pledged on Thursday to try to keep prices "basically stable" this year, after the central bank raised interest rates on Christmas Day for the second time since mid-October.
"It's good to reduce inflation pressures," said Ken Peng, a Beijing-based economist at Citigroup. "I do not see much risk of a sharp economic slowdown."
While the reading was the weakest of the fourth quarter, it was higher than in the months of June through September.
Besides raising rates, the central bank increased the proportion of deposits that lenders must set aside as reserves six times last year and allowed the yuan to gain 3.6 per cent against the dollar.
Stronger yuan
The currency strengthened Friday beyond 6.6 per dollar for the first time in 17 years, fuelling speculation that officials will allow more gains to counter inflation.
China's key stock gauge declined 14 per cent last year, the worst performer among the world's 14 biggest benchmark indexes, on concern that tightening measures will crimp growth and profits.
In comparison, the index jumped 80 per cent in 2009 as a 4 trillion-yuan ($610 billion) stimulus package and record lending helped the economy recover.
The government-backed PMI, released by the Beijing-based logistics federation and the National Bureau of Statistics, gives an indication of manufacturing activity by surveying more than 820 companies in 20 industries, including energy, metallurgy, textiles, automobiles and electronics.
An output index fell to 57.5 last month from 58.5 in November, a measure of new orders dropped to 55.4 from 58.3, and an index of new export orders rose to 53.5 from 53.2, the statement showed.
An input-price index dropped 6.8 points to 66.7 after surging in November to the highest level since June 2008.
Beijing (Bloomberg) China and Taiwan lowered import taxes on more than 800 products starting yesterday under the first trade treaty between the former civil-war foes, an agreement that the island called a "vitamin" for its economy.
China will cut duties on 557 items imported from Taiwan, including fish and bicycles, an increase from 539 when the agreement was signed in June, China's Ministry of Commerce said in a statement last Wednesday.
Taiwan lowered tariffs on 267 items such as tea and cement from the mainland as part of the "early harvest" accord. Cross-strait tensions have eased since Taiwanese President Ma Ying-jeou took office in May 2008 and dropped the pro-independence stance of his predecessor, making economic relations the government's priority.
The island recently signed an agreement with China on medical and health cooperation in December.
"Taiwan's economic growth is very likely to overshoot in 2011 because of the agreement with China," Aidan Wang, economist at Yuanta Securities Investment Consulting Co, said.
