China's manufacturing activity shrank at the fastest pace in more than six and a half years in September as factories slashed production amidst sluggish underlying demand, signaling a worsening slowdown in the world's second biggest economy, bolstering the case for a stimulus boost to prop up growth that is threatening to slip to the lowest level in two decades.
China's manufacturing PMI fell to 47 in September from 47.3 in August, below the mark of 50 which separates expansion from contraction, a private survey showed on Wednesday.
The sub-index measuring factory production, new orders, new export orders and employment in the Chinese manufacturing sector all contracted in the month of September, and that too at a sharper rate than in August, signaling the bleak conditions faced by the country's manufacturers gripped by deflation, overcapacity issues and weak external demand.
The latest data raises fears that China's economy may fail to meet the 7 per cent official growth target for 2015. Meanwhile, the Asian Development Bank (ADB) cut the growth forecast for China's economy for this year to 6.8 per cent from 7.2 per cent earlier while its 2016 estimate was slashed to 6.7 per cent from 7 per cent.