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China is the world’s second biggest economy, but recent reports show its economy is weakening. The numbers show the country’s factory production is at its lowest level in four years. The official Purchasing Manager’s Index, or PMI, marks activity in factories. The manufacturing PMI in China is reported by Markit Economics. The index in China dropped to 49 in February. In January, the PMI was 49.4. Any reading of the PMI below 50 signals contraction, or an economic decrease. It was the seventh month in a row the PMI dropped. Observers of the Chinese economy say February’s PMI reading could have been affected by the Chinese New Year. Many factories close for an extended period of time and workers stay home during the holiday. Another survey shows China’s economy is slumping, or falling. The Caixin Purchasing Managers’ Index fell to a five-month low of 48 in February. The index calculates economic output, new orders and employment. The economy in China grew at an annual rate of nearly seven percent in 2015. That was the slowest amount of growth in 25 years. To help improve the economy, the Chinese announced a round of spending and added to the money supply. The People’s Bank of China recently announced it was cutting the amount of money that banks must hold as reserves. The People’s Bank also added $100 billion in currency into the banking system to aid in new lending.
