Last month, official stats for Chinese Manufacturing activity, a key measure of factory activity, fell slightly from 50.2 to the benchmark 50.
This is the first retreat for manufacturing PMI in 5 months.
A reading above 50 indicates expansion, while a reading below 50 represents contraction.
Worse still, the newly released Caixin General China PMI, a replacement for the previous HSBC PMI figure, has tumbled to 47.8, hitting a 2-year low.
Industry observers suggest this is due to fewer new orders and a weaker demand for manufacturing sectors.
In response, Zuo Xiaolei, chief economist at China Galaxy Securities, says there is no need to panic over the seasonal fluctuation.
"During the summer season, we usually encounter situations like floods, which could pose threats to transportation and normal factory activities. Meanwhile, pork manufacturers have also reduced storage and production due to rising pork prices. However, there is need to over-state these fractional changes in PMI figures."
But at the same time, Zuo Xiaolei warned that we also have to look at reasons behind the scenes.
"The downward pressure of the Chinese economy mainly comes from the structural adjustment of our manufacturing industry to tackle over-capacity, heavy pollution and high energy-use for enterprises. Right now, the new manufacturing structure has not been put in place and we are still in the transitional period."
So far, the Chinese government has been conducting a structural reform as well as seeking new growth momentum for the country's slowing manufacturing industry.
There have been media reports suggesting that the 2022 Beijing-Zhangjiakou Winter Olympics could help shore up some profit-losing industries, such as transportation and infrastructure construction.
However, Zuo Xiaolei believes that the Winter Olympics is just one of these short-term strategies, and China still needs to find a real therapy for structural problems in manufacturing sectors.
