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End of China’s manufacturing woes

By Jesus David Cano Romano
May 7, 2015
End of China's manufacturing woes

According to the business insider in April the ‘British bank’s final purchasing managers’ index (PMI) came in  at 48.9, below the breakeven point of 50 and the weakest since 48.1 in the same month last year’. The Chinese manufacturing industry is seeing a slow down after a long period of exponential growth. However, we can see advances in both technology and government policies that will help bring the Chinese manufacturing levels back to their exceptionally high levels in the future.

Construction has begun on the first fully automated factory in the manufacturing hub of Dongguan, 1000 robots will be introduced into the factory that will reduce the current workforce of 1,800 to only two hundred workers. The Chinese manufacturing is set to see a robotic revolutions with an estimated US$154 BN to be invested in the Pearl River Delta (Huifeng). Guangzhou has set the goal of fostering a robot-manufacturing industry with an output value of more than 100 billion Yuan, as well as automating more than 80 per cent of the city’s manufacturing production by 2020 (Huifeng). It is innovations, such as the rise of robotics within production, which will be able to get China’s manufacturing back to its previous high level.

The Chinese government is anticipated to make ‘some cuts in interest rates or reserve-requirement ratios soon given the situation in the economy,” according to Wu Kan, a money manager at Dragon Life Insurance Co. in Shanghai (Bloomberg Business). These policy changes will increase the money supply therefore increasing investment in machine capital and will add China’s growth via consumption lead growth. This speculation for the alterations in government policy has already pushed the Chinese share price up. The increasingly relaxed policy will encourage larger direct foreign investment into China

It is clear that the Chinese manufacturing will hold its dominant position as the producer of the world in the future to come. Although this article has mentioned only two factors that will aid in boasting the economy there are many other influence, which can help to spur growth such as the low current oil price and rising middle class consumer demand in China.