The global purchasing managers' index was 47.8 in June, a decline of 0.5 percentage points on the previous month, and the fourth monthly decline in a row. The PMI of the eurozone was 45.4 in June and that of the United States 46.5, both 0.8 percentage points lower than their PMI in May.

The economic recovery in Europe and the US has a structural divergence, which is the expansion of the service sector and the deceleration of the manufacturing sector, as sales of goods lag behind consumption of services. With the purchasing power of the people in Europe and the US still being affected by inflation, the lagging effects of rising interest rates, as well as the possibility of a gradual slowdown in credit and social investment may further increase the risk of an economic recession in the two places. That will further shrink demand and impact the global manufacturing industry, particularly manufacturing in China.

Therefore, China's export growth may face greater pressure in the second half of the year. This was already indicated by the data in May, when China's monthly export growth slowed 16 percentage points from a year earlier. Notably, exports of mechanical and electrical products and labor-intensive products have all slowed down at the same time. The growth of exports of electric manned vehicles, lithium batteries and solar cells has also slowed. And China's exports to emerging market economies begun to decline in May as well.

That means the Chinese economy will have to rely more on domestic demand in the second half of the year as export uncertainties increase. The country should therefore expand its efforts to boost consumption. At the same time, the government should maintain the rapid growth of investment in infrastructure, high-tech manufacturing, and the upgrading of equipment and technology.

If the manufacturing industry and the real estate industry are both under downward pressure at the same time, it will exert a greater constraint on economic recovery. Policymakers should introduce new measures to spur domestic demand while at the same time taking heed of the looming risks.

- 21ST CENTURY BUSINESS HERALD