Beijing: China’s manufacturing expanded at the fastest pace in 18 months and a government researcher said economic growth will accelerate this quarter.
The Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 55.2 in October from 54.3 in September, the Federation of Logistics and Purchasing said on Sunday in an emailed statement in Beijing. An index of export orders climbed to 54.5 from 53.3.
Premier Wen Jiabao’s $586 billion (Rs27.5 trillion) stimulus plan and unprecedented growth in new loans are sustaining China’s rebound amid signs that exports may start to recover as the global slump eases. The world’s third biggest economy may expand at a 9.5% annual pace this quarter, Zhang Liqun, of the State Council Development and Research Center, said in the statement.
China’s recovery has been impressive, but has been heavily reliant on government-directed investment, said Brian Jackson, Hong Kong-based strategist for emerging markets at Royal Bank of Canada. External demand will provide an additional source of support for growth in the months ahead, he said, adding that the government may start tightening policy from early 2010.
On recovery path: The Saic-GM-Wuling Automobile Co. factory in Liuzhou, China. Passenger-car purchases exceeded one million for the first time in September as GM reported that sales doubled. Qilai Shen / Bloomberg
The latest PMI number was higher than the median estimate of 54.7 in a Bloomberg News survey of 10 economists. A reading above 50 indicates an expansion. Today’s figure compares with a record-low 38.8 in November last year, when recessions in the US, Europe and Japan sent export orders plunging.
China’s cabinet pledged on 21 October to continue monetary and fiscal stimulus even after growth exceeded officials’ expectations for the first nine months of the year. Commerce minister Chen Deming warned on Saturday that the global economy may plunge if nations withdraw support measures too quickly.
A jump in the import index to 52.8 from 50.7 shows an acceleration of domestic demand, Zhang said.
An output index rose to 59.3 in October from 58 in September and a measure of new orders climbed to 58.5 from 56.8. An index of employment dropped to 52.4 from 53.2.
Surging auto sales, driven by tax cuts and subsidies, are boosting manufacturing. Passenger-car purchases exceeded one million for the first time in September as General Motors Co., the largest overseas auto maker in China, reported that sales doubled.
China will sustain its economic rebound this quarter and growth is likely to top the government’s 8% target for 2009, the central bank said on 30 October.
Policymakers need to manage inflation expectations, curb excess capacity and encourage sustainable lending growth, the central bank said in its report on the third quarter economy.
Billionaire investor George Soros said on 30 October in Budapest that China will be the greatest winner from the global financial crisis, with the US losing the most, leading to a shift in their positions that exceeds expectations.
Nobel Prize-winning economist Joseph Stiglitz said on Saturday that emerging economies including China need to guard against bubbles caused by the surge in liquidity as governments around the world try to stimulate growth.
The manufacturing index, released by the logistics federation and the Beijing-based National Bureau of Statistics, is based on replies to questionnaires sent to purchasing executives at around 730 companies in 20 industries. It was instituted in January 2005.