China’s factory activity returned to expansion in March, hitting a one-year high in the latest sign the country’s economic recovery is picking up pace. The official manufacturing purchasing managers’ index (PMI) rebounded to 50.8 in March from 49.1 in February, according to the National Bureau of Statistics (NBS). The latest above-50 figure, which indicates expanding activity, ended five consecutive months of contraction. It was the highest since March of last year when the gauge stood at 51.9. “In March, as companies stepped up resuming production after the Lunar New Year, market vitality improved,” said Zhao Qinghe, Senior Statistician at the NBS. China's manufacturing sector saw a wider upward swing in March as 15 of 21 surveyed subindustries expanded, up from just five one month ago. But Zhao added that “the proportion of enterprises noting increased industrial competition and insufficient market demand is still high”. Skepticism has persisted as the country’s property crisis and local government debt have worsened.
The Chinese leadership has stepped up its charm offensive to bolster both overseas and domestic expectations. Chinese President Xi Jinping told an American delegation of business leaders and think tank members that the country’s economy was “sound and sustainable”. He also explicitly rejected the narrative that the Chinese economy is collapsing or had peaked. Chinese authorities have set the country's growth target for 2024 at around 5%, the same as last year and in line with market estimates but still widely viewed as “ambitious” given the multifold challenges facing the economy. These include a protracted property market crisis, an aging society, a jittery private sector, anxious foreign investors, and complex geopolitical circumstances.
Under China’s official manufacturing PMI, the new-orders subindex rose to 53 in March from 49 a month earlier, showing that market demand was picking up. The new manufacturing export order subindex jumped to 51.3 in March from 46.3 in February, indicating an expansion in foreign demand during the month. China’s non-manufacturing PMI went up to 53 in March from 51.4 in February, rising for the fourth straight month. Within the non-manufacturing PMI, the subindex for the construction sector rebounded to 56.2 in March from 53.5 in February, while the service sector business activity index climbed up to 52.4 from 51. “Most service sector companies remain optimistic about future market development. Construction firms have increased confidence in the recent industry development,” said Zhao of the NBS. The official composite PMI – a combination of the manufacturing and non-manufacturing indices – rose to 52.7 in March from 50.9 in February, the South China Morning Post reports.
