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China manufacturing activity slips in April

Manufacturing activity in China slowed slightly in April and the costs of raw materials fell, according to official data released Sunday, as Beijing tries to cool the world's second-largest economy.

The purchasing managers index (PMI) slipped to 52.9 in April from 53.4 in March, the China Federation of Logistics and Purchasing said in a statement.

Data released by British banking giant HSBC on Friday showed the PMI at 51.8, unchanged from March.

A reading above 50 indicates the sector is expanding while a reading below 50 indicates contraction.

The input prices sub-index, which measures the cost of raw materials
and is an indicator of inflation pressures, declined to 66.2 from 68.3 in March, the official figures showed.

Soaring food and housing prices are a major bugbear for China's leaders, anxious about the potential for inflation to spark social unrest in the country of more than 1.3 billion people.

Inflation remained stubbornly high in March, with the consumer price index rising 5.4 per cent year-on-year -- the fastest pace since July 2008 and well above the government's 2011 target of four per cent.

Prices have remained high despite four interest rate hikes since October and numerous increases in the bank reserve requirement ratio, which effectively limits the amount of money banks can lend.

The stubbornly high prices have topped public concerns, prompting Premier Wen Jiabao to pledge new efforts to contain the problem in his address to China's rubber-stamp parliament last month.

10:03 | |

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