Manufacturing industry set for rapid decline

China's manufacturing industry may rapidly deteriorate in August affected by a faster drop in new orders, which may prompt Beijing to lay out more aggressive growth-stabilizing plans.

A forecast reading of the manufacturing Purchasing Managers' Index fell sharply to 47.8 in August from July's 49.3 figure, hitting the lowest level in 9 months, HSBC said on Aug 23.

The indicator has been lower than the equilibrium level of 50 for 10 consecutive months, which means that the country's manufacturing sector is contracting. A reading above 50 shows expansion.

Chinese producers are still struggling with both strong global headwinds and weak domestic demand, as shown by the sub-index of output that declined to 47.9 from 50.9 in July, the lowest figure in five months, the HSBC report said.

Meanwhile, new export business declined at the sharpest rate since March 2009, adding to concerns about the decreasing overseas demand amid the deepening eurozone debt crisis.

"The growth rate of industrial output may continue to slow down in the future," said Qu Hongbin, chief economist at HSBC China and co-head of Asian Economic Research at HSBC.

"To achieve the stated policy goal of stabilizing growth and the jobs market, Beijing must step up policy easing to lift infrastructure investment in the coming months," he said.