Every number is scrutinized. Every figure is checked. Amid growing fears about the depth of the economic slowdown in China, data has become a new weapon in the trade war with the United States.   

On Wednesday, the National Bureau of Statistics rolled out anemic manufacturing stats, which showed the sector expanded at its weakest level in more than two years.

The official Purchasing Managers’ Index, or PMI, is a snapshot of business confidence in the world’s second-largest economy and a key indicator for the start of the fourth quarter.

In October, it dropped to 50.2, the slowest pace of growth since 2016, and down from 50.8 in September. New export orders, an indicator of future activity, also contracted for a fifth straight month, dipping to 46.9 from 48.0 in September.

“All the numbers from China’s PMI release confirm a broad-based decline in economic activity,” Raymond Yeung, the chief economist for China at ANZ, a leading regional bank, said in a client note, adding that conditions for the private sector were “much worse.”

“The government’s priority is to avoid a financial blow-up,” he added.

Policy cocktail

Even though the PMI were still above the 50-point mark, which separates expansion from contraction, the statistics suggest that Beijing will come up with another cocktail of policy initiatives in a bid to stimulate growth.

“The manufacturing sector, in general, continued to expand at a slower pace,” Zhao Qinghe, a senior statistician at the National Bureau of Statistics, said at a media briefing. “Fundamentally, the manufacturing sector remains stable.”

Still, the danger signs are flashing. Earlier this month, GDP growth came in at a sluggish 6.5% in the third quarter, figures harking back to the 2009 Great Recession.

When you add the fallout from the trade dispute and the threat by President Donald Trump to impose tariffs on all Chinese imports worth US$508 billion, concerns are growing that the strain might buckle an economy in transition.

The old, low-tech-fueled export model is being transformed by high-tech manufacturing and consumer spending. But it comes at a time when Beijing is clamping down on credit in a broader onslaught against rising local government and corporate debt.

Squeezed of investment in President Xi Jinping’s deleveraging campaign, small- and medium-sized companies are hanging on by their fingernails as the economy cools and the Cold War with the US escalates.

Another byproduct from the credit crunch has been an equity markets meltdown, while on the currency front, the renminbi has yo-yoed during the past three months.

Overnight, it slipped below the physiological seven-dollar mark to a decade-low of 6.9574 yuan to the greenback.

“The yuan’s weakness reflects [a] lack of confidence as more stimulus means [a] more fiscal deficit, a negative factor in the longer run,” Hussein Sayed, the chief market strategist at ForexTime, said.

Others disagree. China’s media reported earlier this week that the decision by the central bank to allow the exchange rate to float more freely could be a “wise choice against a backdrop of downside risks.”

Mainland markets

In the past nine months, mainland markets have resembled a white-knuckle rollercoaster rider with nearly $3 trillion being wiped off the Shanghai Composite Index and $1.1 trillion off Shenzhen.

Caught amid the carnage were 150 million individual investors. To ease their pain, the People’s Bank of China and the China Securities Regulatory Commission have launched a package of measures, including stock repurchases and increasing liquidity.

“Already the implementation of a series of favorable policies shows the Chinese governments’ concern for and support to private enterprises, as well as its confidence in the stock market,” Sun Chao, a research fellow at the International Monetary Institute of Renmin University of China, wrote in the influential China Daily. “This has acted as a tonic for the sluggish market.”

For now.

But finding a long-term fix will take time and diplomacy, and both are in short supply. At least Trump and Xi could set the ball rolling for a trade war armistice when they meet at the G20 Summit in Buenos Aires at the end of next month.

In the meantime, keep crunching the numbers.