Comment: China'S PMI Is Stable, But Risks Remain.

According to the latest data released by HSBC /Markit, China's Manufacturing Purchasing Managers' index (PMI) in September was 50.2, unchanged from the August readings, but the final value was lower than the initial value of 50.5.

China's September PMI data show that although the readings remain stable due to the increase in export orders, the stagnant economy still faces considerable risks.

According to data released by HSBC /Markit, a sub index of new export orders rose to 54.5 in September, the highest in nearly four and a half years, indicating external demand growth, but domestic demand remained weak.

What is even more worrying is that the survey data show that the employment market is further weakening. The classification index of measuring employment in manufacturing industry has dropped for eleventh consecutive months in September, which is bound to cause concern among Chinese leaders.

In addition, the weakening of the real estate market has continued to put pressure on weak domestic demand in China, and China's economic growth as the world's second largest economy has slowed this year.

With the further cooling of the real estate market, economists believe that Chinese policymakers will launch stimulus measures in the coming months to achieve the goal of the Chinese government's economic growth of about 7.5% this year.

Qu Hongbin, chief economist of HSBC Greater China, said: "overall, China's September data show that manufacturing activity is expanding at a slow pace, and we believe that China's economic growth is still facing downward trend.

I believe that the Chinese government will implement a more lenient monetary and fiscal policy.

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Although China's export orders grew strongly in September, the overall output fell to a low of four months, but still maintained above 50.

On Tuesday, after the HSBC /Markit released data, Shanghai's stock market fell back to the early day.

Despite this weak economic reading, Chinese leaders have repeatedly said that there will be no big change in recent policies.

Premier Li Keqiang said earlier this month that

We can not rely on loose credit to stimulate economic growth, and the Chinese government will continue to make "targeted adjustments" to promote economic activities.

Accompanied by worrying

The latest announcement also shows that the profits of Chinese industrial enterprises declined in August, and many large Chinese enterprises received high subsidies from the government.

HSBC /Markit released its PMI initial data last week, which showed that the factory employment index fell to a six year low in September, but this Tuesday's final data significantly raised the index.

Rui Yin (UBS) Hongkong economist Wang Tao said: "China's domestic economy is very weak, and the real estate market has brought downward pressure on the Chinese economy, but unless the labor market appears obvious weak signal, the Chinese authorities will not respond.

"

As some cash strapped customers may postpone repayment, small businesses in China face greater economic pressure.

As banks face a lot of bad loans and fear of default, banks become more cautious about loans to small businesses, and small businesses have increased difficulties in obtaining credit support. ICBC has said that the second quarter of the bank's 80% new loans came from manufacturing and wholesale businesses.

China's banking regulator recently announced that it has issued revised internal control guidelines to the banking industry to ensure that banks take appropriate risk management control and increase penalties for violations.