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Credit crunch to pressure factories despite gains posted in mainland

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The mainland's manufacturing activity, which last month rose at the quickest pace in five months, may slow as a result of the global credit crunch, analysts have warned.

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The credit crunch triggered by the United States subprime mortgage crisis would undermine consumer confidence globally and lead to fewer manufacturing orders for mainland firms, the analysts said.

The Purchasing Managers' Index rose to 56.1 from 54 in August, according to the China Federation of Logistics and Purchasing, which compiles the index on behalf of the National Bureau of Statistics.

That was the highest reading in five months.

A PMI reading of more than 50 indicates an expansion while one below 50 suggests contraction. The PMI is based on a survey of more than 700 companies.

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Raymond So Wai-man, an associate dean of the faculty of business administration at the Chinese University, said the latest PMI had not reflected the impact brought by the recent global crunch.

'Generally, orders are placed two to three months ahead of manufacturing,' Mr So said.

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