China's economic woes continue as factory activity contracts at fastest pace in three years

 
Sarah Spickernell
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China's stocks have lost around 40 per cent of their value since June (Source: Getty)
Here we go again? Shares closed lower in China this morning, after manufacturing figures showed the sector in the world's second largest economy contracted last month at its fastest pace in three years.
The official purchasing manager's index (PMI) was 49.7 in August – down from 50 in July. Any number below 50 denotes a contraction. Meanwhile, the Caixin/Markit PMI, also published this morning, put the PMI at an even lower level of 47.3, which is its weakest since 2009.
The news sent Chinese shares down, with the Shanghai Composite closing 1.03 per cent lower, while the Shenzhen Composite closed 4.62 per cent lower. Other Asian markets followed, with the Nikkei falling 3.84 per cent, while the Hang Seng dropped 0.84 per cent lower.
Since June, China's stocks have lost around 40 per cent of their value. Investor jitters were at the fore last week, when an 8.5 per cent fall on the Shanghai Composite sparked a global sell-off across global markets. The FTSE 100 alone had £74bn wiped off it last Monday.
China has attempted to calm the situation by injecting money into markets and by cutting the benchmark one-year interest rate by 0.25 per cent. The Shanghai Composite is currently down 1.77 per cent compared to yesterday.

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