China factory surveys show economy weakening

BEIJING

China's economy weakened further in recent weeks, surveys released on Monday showed, signaling the need for support as the government ratchets up stimulus.

The Caixin purchasing managers survey showed new manufacturing orders fell at the fastest pace in 2 years in September.

An official measure released by the National Bureau of Statistics showed a less drastic decline but it marked a fifth straight month of contraction.

The purchasing managers index was at 49.8 in September, up from a 6 month low of 49.1 in August. The index is on a scale where figures above 50 indicate expansion.

The survey showed that factory output rose while new orders fell.

Chinese stock markets surged yesterday, reflecting enthusiasm over a barrage of policy measures announced last week, including lower interest rates and smaller down payment requirements for mortgages and a cut in required bank reserves.

Over the weekend, Beijing moved forward with the measures announced last week to support the property industry and revive languishing financial markets.

The central bank announced on Sept. 29 that it would direct banks to cut mortgage rates for existing home loans by Oct. 31.

Meanwhile, the major southern city of Guangzhou lifted all home purchase restrictions over the weekend, while both Shanghai and Shenzhen revealed plans to ease key buying curbs.

Property developers have struggled after the government cracked down on excessive borrowing for projects several years ago. 

The downturn in the property sector has rippled throughout the world's second-largest economy, hitting many other industries that depended on booming housing construction, such as appliance makers and manufacturers of building materials.