China's manufacturing activity cools in July

By Kim Young-gyo HONG KONG, Aug. 1 (Yonhap) -- China's manufacturing activity slowed for the fourth consecutive month in July as the government continued its monetary tightening, an industry group said Monday. The Purchasing Managers Index (PMI) for China's manufacturing sector came in at 50.7 in July, down from 50.9 a month earlier, according to the China Federation of Logistics and Purchasing (CFLP). The July figure was the lowest in 29 months. The PMI is an indicator that measures the economic health of a country's manufacturing sector. A reading of 50 or above represents an expansion of the sector compared to the previous month while a reading lower than 50 represents a contraction. The CFLP said the continuous drop was largely due to China's recent efforts to cool down its economy. China is dogged by high inflation triggered by excessive liquidity and an overheated economy, with the consumer price index (CPI) rising 5.4 percent year-on-year in the first half of 2011. The world's second-largest economy expanded 9.6 percent in the same period, compared with the 10.3 percent increase a year earlier. In a move to counter inflation, the Chinese government has started to roll back the stimulus package it introduced during the global financial crisis, while the central bank raised the benchmark interest rate for the third time this year in July.