 China factory activity stabilises in January Beijing (AFP) Feb 1, 2017 - Chinese factory activity expanded last month, data showed Wednesday, the latest indication that the world's second largest economy is stabilising but analysts warned of headwinds caused by emerging US protectionism. The crucial manufacturing sector has for years been struggling in the face of sagging world demand for Chinese products and excess industrial capacity left over from the country's recent infrastructure boom. But an upturn in the housing and construction markets thanks to cheap credit -- following a series of monetary easing measures -- has contributed to a rebound in manufacturing activity. The official purchasing managers' index (PMI), which gauges conditions at factories and mines, came in at 51.3 in January, down from 51.4 the previous month. A figure above 50 marks an expansion of manufacturing activity, and below 50 a contraction. Analysts surveyed by Bloomberg had expected an average of 51.2 for January. The marginal dip came as many businesses closed for Chinese New Year at the end of the month, with workers heading home to celebrate. But Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd in Hong Kong, told Bloomberg News the numbers suggest the manufacturing sector was continuing to consolidate. "Looking ahead, the government will continue to juggle growth and capacity reduction. This headline PMI will still stay above the threshold of 50, but it's hardly impressive," he said. While Beijing has said it wants to reorient the economy away from a reliance on exports and debt-fuelled investment, and towards a consumer-driven model, the transition has proven challenging. China is a vital driver of global growth, but its economy expanded just 6.7 percent in 2016 -- its weakest rate in a quarter of a century, though a slight uptick in the last three months fuelled hope the slowing trend could be coming to an end. However, China, along with most other economies, faces an uncertain future with US President Donald Trump threatening to review global trade deals and tariffs as part of a seemingly protectionist agenda. BMI Research, Fitch Group's research arm, said in a note that manufacturing will continue to "underperform" sectors like services. "Weaker domestic demand and an uncertain external environment due to rising US protectionism will weigh on the former, while services will benefit from continued investment by the government and the private sector," it said, according to Bloomberg News.
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A yawning trade deficit with China cost 3.4 million US jobs between 2001 and 2015, according to a report published Tuesday which coincided with abrupt White House efforts to retool trade policy.
Mounting American reliance on Chinese imports and unfair Chinese trade practices have also helped hollow out the US manufacturing sector, which accounted for nearly three quarters of all the jobs lost due to the trade gap, said the report by the Economic Policy Institute (EPI).
The nonpartisan think tank's report jibed with President Donald Trump's blunt moves to upend prevailing policies on trade, which he has blamed for the export of American industrial jobs, chiefly to China and Mexico.
Peter Navarro, a top Trump economic adviser, has long accused China of adopting trade policies that directly undermine the US economy.
In helping launch the report, Leo Gerard, president of the United Steelworkers union, told reporters that Trump, a Republican opposed to trade liberalization, had been victorious among traditionally pro-Democrat voters in industrialized areas of the United States.
"And the reason for that shift is that they understand the economic anxiety that has been brought forward by this model of trade, whether it was Mexico, China, South Korea or any others that has resulted in their jobs' being insecure, their wages' being pushed down," he said.
"And primarily that's the result of China."
Between 2001 and 2015, the US trade deficit with China more than quadrupled to $483.2 billion, according to the report.
While Labor Department data show the US manufacturing sector is smaller than when former president Barack Obama took office in January 2009 in the midst of the financial crisis, it has added 800,000 jobs since February 2010.
- 'Basically fallacious' -
Computers and electronic parts were among US manufacturing industries that suffered the most from displacement, according to the EPI report, losing 1.2 million jobs during the period covered in the report.
"The vast bulk of the manufacturing jobs lost were in so-called durable goods industries, high-tech and very capital-intensive industries that provide very good jobs with excellent benefits in industries like steel and machine tools and electronic appliances," said the report's author, Robert Scott.
However Marcus Noland, director of studies at the Peterson Institute for International Economics, rejected what he said was the report's "basically fallacious" direct correlation between a trade deficit and job losses, noting that the United States was now at or near full employment despite a nearly $500 billion trade deficit with China.
As electronics makers had moved manufacturing overseas, he said, this had reduced the number of US manufacturing jobs in the US but promoted domestic employment in design, software, advertising and other areas.
Trade "fundamentally does not destroy or create jobs," said Noland. "It affects the composition of employment, it affects the occupational distribution."
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