Despite endless jabs of stimulus and the biggest increase in credit on record, China Manufacturing and Non-Manufacturing PMIs plunged in February.
As a reminder, in what may soon be dubbed the Shanghai Accord 2.0, the PBOC announced it had flooded the economy with a gargantuan 4.64 trillion yuan in various new forms of debt which comprise China's Total Social Financing in January, including notably, the "shadow" credit which Beijing had been aggressively cracking down on: an aggressive credit expansion which many took as a tacit confirmation that China was losing the fight with deleveraging.
But, after a brief bounce in January, everything tumbled again with the first official gauge of China's manufacturing sector in February (the purchasing managers index) falling further below the 50 mark that signifies contraction, dropping to 49.2, compared with a median estimate of 49.5.
The gauge of new export orders slumped to 45.2 from 46.9 in the previous month indicating weakening external demand amid a global economic slowdown.
The non-manufacturing PMI, which reflects activity in the construction and services sectors, also fell, to 54.3 compared with 54.7 in January.
Production may have slowed in February, due to effects from the Lunar New Year holidays and a temporary campaign by some industrial provinces to reduce pollution.