Yoshida in China: Is China’s manufacturing sector slowing down?

Two data points unveiled Wednesday (Aug. 1st) are confusing the narratives on the state of China’s economy.

Chinese factory purchasing managers' index (PMI), an official number announced Wednesday, fell to an eight-month low of 50.1 in July, indicating that China’s factories have made a slow start to the second half of this year.

Meanwhile, an HSBC PMI rose to a seasonally adjusted 49.3, its highest level since February. PMI readings around 50 show a threshold dividing expansion from contraction.

So, China’s official factory PMI suggests the sector is barely growing, while the HSBC number tells a story that the more market-sensitive private sector has begun stabilizing.
If you like the HSBC’s number, you may hold the view that China’s economic slowdown hit the bottom in the second quarter of 2012, and you can look forward to a mild rebound beginning in the third quarter.

But you probably shouldn’t disregard the warning China’s premier Wen Jiabao made Tuesday (July 31st)  He noted that people should not underestimate the risks that the Chinese economy is facing, with growth slowing at home and the world economy in bad shape. “Downward pressure is still relatively big,” Wen said.

The reality is that the Chinese economy grew 7.6 per cent in the second quarter of the year, its slowest since early 2009 at the height of the global financial crisis.


ZTE: A new star is born in the global smartphone market

It’s official. China’s ZTE, despite its brand’s lack of visibility among U.S. consumers, has become one of the top five smartphone vendors in the world, kicking RIM’s Blackberry butt.

ZTE shipped eight million smartphones in the second quarter of 2012, according to IDC. The company’s worldwide market share is by just 0.5 percentage points behind HTC and 1.4 percentage points behind Nokia.  

Should we be surprised about that? No, not really. But if anyone out there is still thinking that Chinese vendors are only good at low-end mobile phones, it’s absolutely time to correct that pre-conceived notion.

ZTE is determined to throw more punches to its smartphone drive by launching a new “ultra-thin quad-core Grand Era smartphone.” Powered by Nvidia’s Tegra 3 applications processor, the new smartphone features a 4.3-inch qHD screen, with its body as thin as 7.8mm, according to ZTE. And wait, there is more. ZTE promised to release an LTE version of the Grand Era before the end of this year.

The Chinese company’s smartphone shipments for the full year of 2011 were more than 15 million, an increase of 400% over 2010. That officially makes ZTE the fastest growing smartphone maker after Apple.

Related stories:

-Insufficient baseband chip supply hurting LTE smartphone sales

-Investigators zeroing in on China’s ZTE, Huawei

-China unknowns may be next smartphone stars