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Portfolio > Economy & Markets

China Sees Manufacturing Rise

By Marlene Y. Satter

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China could be overcoming the challenges imposed by austerity and economic woes in the rest of the world, if manufacturing numbers are any indication. Multiple assessments of its manufacturing demand are up, showing that the country is rising above financial woes troubling other regions.

Bloomberg reported Wednesday that a purchasing managers’ index from HSBC Holdings and Markit Economics provided a final reading of 49.3 for April, compared with March’s final number of 48.3 and a preliminary reading in late April of 49.1. In addition, a separate index from China’s statistics bureau and logistics federation, released Tuesday, was at 53.3, indicating the fastest growth in a year.

A reading below 50 indicates contraction, while a score above 50 shows expansion.

“Easing measures are starting to work,” said Qu Hongbin, Hong Kong-based chief economist for China at HSBC. In the report, Qu said that China’s growth could “bottom out” in the present quarter and then climb to an annual rate of over 8.5% in the second half of the year.

The HSBC PMI has recorded signs of six straight months of contraction in manufacturing, an indication that China’s manufacturing is still suppressed because of global demand weakness. That is the longest period of contraction since the financial crisis. China’s official index is the result of responses from managers at more than 820 companies in 28 industries; HSBC’s covers more than 420 companies, and focuses more on smaller businesses.

Prior to the report’s release, Chang Jian, a Hong-Kong-based economist with Barclays Capital, was quoted saying, “The need for aggressive policy easing is limited given the government’s desire to slow growth and the upside inflation risks.” He added, “Fine-tuning measures such as easing credit, support for first-home buyers and expansionary fiscal policy to support infrastructure will gradually feed through, so the slowdown in growth will bottom out this quarter.”

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