Rise in Chinese manufacturing index halts fears of slowdown
Published 02/01/2012 | 05:00
A CHINESE manufacturing gauge rose by more than economists expected, suggesting a slowdown in the world's second-biggest economy may be stabilising.
The purchasing managers' index was 50.3 in December from 49 in November, according to a statement yesterday from the statistics bureau and China's logistics federation.
The reading exceeded all forecasts in a Bloomberg News survey of 15 economists where the median estimate was 49.1.
President Hu Jintao said in his new year address that China aims for steady and "relatively fast" growth in 2012 amid an increasingly unstable global recovery.
Europe's sovereign-debt crisis and a crackdown on speculation in China's housing market may limit the expansion and officials are also grappling with banks' bad-loan risks after a record jump in credit in 2009 and 2010.
"Growth momentum will continue to wane this quarter, as the European crisis will hurt China's exports and a cooling property market will drag down domestic demand," said Zhang Zhiwei, a Hong Kong-based economist at Nomura Holdings Inc. who has previously worked for the International Monetary Fund.
"The rebound does not signal that the economy has turned around."
A separate index released by HSBC Holdings Plc and Markit Economics on December 30 indicated that manufacturing contracted for a second month while the gauge also rose. The studies have different sample sizes and methodologies.
The Shanghai Composite Index tumbled 22pc last year, the most since 2008, on concern that monetary tightening and efforts to rein in property prices in big cities will derail growth. The index's 33pc drop since 2009 makes it the worst performer among the world's 15 biggest markets.
Bank of America Merrill Lynch estimates that the Chinese economy grew 8.7pc, the slowest pace since the second quarter of 2009.
In yesterday's statement, the logistics federation said the economy's slowdown is stabilising even as growth momentum remains "relatively weak".
A gauge of export orders rose, while remaining below 50, the dividing line between contraction and expansion.
An output index jumped to 53.4 from 50.9 in November.