China manufacturing growth rate slows

Manufacturing and export sectors have been hurt by slowing demand from key markets

China has reported a slowdown in growth of its manufacturing sector, underlining concerns that its economic recovery continues to remain fragile.

The official Purchasing Managers' Index (PMI), a key measure of manufacturing activity, fell to a four-month low of 50.1 in June, from 50.8 in May.

A sub-index of new orders also fell, indicating a weak demand.

The manufacturing and export sectors have been key drivers of China's economic growth in recent years.

However, they have been under pressure lately amid a slowdown in key export markets as well as China's own economic growth.

"The June PMI fall, across the board on major sub-indexes, indicates downward pressure in the economy," said Zhang Liqun, an economist with the Development Research Centre, a top government think tank.

Meanwhile a separate report by HSBC, which surveys smaller firms, said that manufacturing activity in the country fell to a nine-month low.

HSBC said its PMI for China fell to 48.2 in June, down from 49.2 in May.

Further slowdown?

China's manufacturing and export sectors have been hurt by a slowdown in key markets such as the US and eurozone.

That has had a direct impact on its overall economic growth.

China's economy expanded at an annual rate of 7.7% in the first three months of the year, down from 7.9% in the previous quarter.

As a result, there have been calls for China to reduce its reliance on exports and boost domestic consumption to rebalance its economy.

For its part, Beijing has indicated that it wants to take steps to boost domestic consumption. But there have been concerns that as it shifts its growth model, it is likely to see a slowdown in growth in the near term.

Some analysts said that China's growth rate was likely to slow further in the coming months.

Zhiwei Zhang of Nomura said "there is a 30% chance" that China's growth rate may drop below the 7% mark in the third or fourth quarter.

Last month, the World Bank cut its growth forecast for China, saying that rebalancing efforts had slowed the world's second-largest economy,

The bank now expects China to grow 7.7% in 2013, down from its earlier projection of 8.4%.