BEIJING — China's manufacturing fell to an 11-month low this month, a disappointing performance that puts pressure on Chinese leaders to reverse a deepening slowdown in the world's second-largest economy.
The report released by HSBC Corp. on Wednesday comes as expectations mount that Beijing will launch stimulus measures to shore up growth that fell to a two-decade low of 7.5 percent in the latest quarter.
HSBC said the preliminary version of its monthly purchasing managers index declined to 47.7 this month from June's 48.2 on a 100-point scale on which numbers below 50 show a contraction in activity.
The decline adds to pressure on the labor market and "reinforces the need to introduce additional fine-tuning measures to stabilize growth," said HSBC economist Hongbin Qu in a statement.
China's top economic official, Premier Li Keqiang, was quoted by newspapers Tuesday as saying the "bottom line" for growth was 7 percent. Financial markets rose on expectations that meant Beijing might take steps to reverse two straight quarters of declining growth.
A stimulus would temporarily set back Beijing's efforts to nurture self-sustaining growth based on domestic consumption and reduce reliance on exports and investment. But communist leaders might feel compelled to backtrack if a sharper-than-expected slowdown raises the risk of job losses and political tensions.
China's slowdown is largely self-imposed. The government has tightened controls on investment and real estate development as part of its effort to shift the basis of growth. But a slump in global demand for Chinese goods has hurt exporters and pushed growth down more sharply than expected.
Growth also has been dented by a crackdown this year on a boom in bank lending. Tighter lending controls caused a temporary shortage of credit in financial markets last month. Further controls, especially on unregulated private lending that supports entrepreneurs, could hurt companies that generate most of China's new jobs and wealth.
