China's manufacturing contracted as the worst financial crisis since the Great Depression eroded export demand.

The Purchasing Managers' Index fell to a seasonally adjusted 44.6 last month from 51.2 in September, the China Federation of Logistics and Purchasing said at the weekend. That was the lowest since the gauge was launched in July 2005, Bloomberg News reported. A reading below 50 reflects a contraction, above 50 an expansion.

China's government has pledged extra infrastructure spending to stimulate the world's fourth-biggest economy amid the global slowdown. The government has already lowered rates three times in the past two months, increased export rebates and cut property transaction taxes.

"The government needs effective stimulus measures to spur growth," said Wang Qian, a Hong Kong-based economist at JPMorgan Chase & Co. "The external economic outlook is worsening rapidly."

Manufacturing contracted in July for the first time since the survey began in 2005. It also shrank in August. The October index was a record low. China's economy grew at the slowest pace in five years in the three months through September as export orders shrank and industrial production waned. The expansion cooled for a fifth straight quarter to a 9-percent gain from a year earlier.

Chinalco Luoyang Copper Co, a Chinese processor of the metal, said orders fell 20 percent in the third quarter as domestic and international demand weakened.

The global slowdown has also curbed demand for the nation's goods. The International Monetary Fund estimated that advanced economies would expand 0.5 percent next year, the slowest pace since 1982.

Falling property sales and prices in major cities have been another drag on China's growth.

The Purchasing Managers' index is based on a survey of more than 700 companies in 20 industries, including energy, metallurgy, textile, automobiles and electronics.

(Shanghai Daily November 3, 2008)