Manufacturing levels in China expanded at their slowest rate in nine months, but greenfield FDI levels appear to have remained steady.

The Purchasing Managers’ Index (PMI) for China fell from 52.9 in April to 52 in May. Anything above 50 means that the sector is growing, whereas below the mark suggests it is shrinking. Much of the decline was blamed on the Chinese government’s attempts to slow down inflation, which has been of particular concern for the past two years.  


The PMI fell in April as well, prompting a few Chinese officials to suggest that slowing economic growth is a distinct possibility.

China was not alone in experiencing a slowdown in the sector, with the US, UK and other major economies all suffering. A similar measure put the US manufacturing industry’s rate at 53.5. While above the all important 50 level, it was a significant fall from 60.4 in April.

The collective struggles caused widespread concern that the global economic recovery could be faltering. Manufacturing is largely considered as a bellwether to overall economic performance.

Yet in terms of FDI, according to greenfield investment monitor fDiMarkets project levels in Chinese manufacturing have been stable through the year.

In May, fDiMarkets recorded 35 projects, a gain from the 34 recorded in April. To date this year the worst month for China has been January with 33 projects and February the best with 39 projects. Job creation levels have not fluctuated significantly either, and instead have been rather impressive with an average monthly job creation of more than 17,000. Average capital expenditure per month in 2011 has been at a healthy $4.19bn.

As recently as May, major firms such as Unilever, Saint Gobain and Hyundai all embarked on multimillion dollar projects in China. Hyundai’s project alone was worth more than $500m in the city of Ziyang, and will help produce 160,000 commercial vehicles by 2013.