China's manufacturing activity expanded to a thirteen-month high in November, according to the HSBC Purchasing Managers’ Index (PMI) released Monday.
The final reading of the PMI, a measure of the nationwide manufacturing activity, rose to 50.5 in November compared to 49.5 in October. “This confirms that Chinese economy continues to recover gradually. We expect GDP growth to rebound modestly to around 8 percent in 4Q as the easing measures continue to filter through,” Hongbin Qu, chief China economist and co-head of Asian economic research at HSBC, said in a note.
Significantly, the index moved into the expansion zone, a reading above 50. The expansion of the manufacturing activity should allay the fears about a sharp retardation of the Chinese economy. “New orders rose for the second month in a row, although at a slightly weaker pace, while new export orders rose for the first time since April. New export orders increased at a marked rate, with over 17 percent of panellists indicating growth,” Markit said in a note.
It was reported last month that China’s industrial production rose in October compared to that in the previous month, indicating an upswing in the manufacturing output. The data released by the National Bureau of Statistics of China showed that the country’s industrial production, which measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities, rose to 9.6 percent in October, up from 9.2 percent in September. It was above the analysts’ expectation of a 9.4 percent increase.
There have been fears of a hard landing after the data by the National Bureau of Statistics of China showed that the country’s gross domestic product growth slowed down to 7.4 percent in the third quarter, down from 7.6 percent in the second quarter, due to the soft global demand and reduced real estate investment in the world's second largest economy.
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The government has lowered its economic growth target in 2012 to 7.5 percent. In 2011 and 2010, the economy grew at the rate of 9.2 percent and 10.4 percent respectively.
Beijing's goal this year will be to promote a steady and robust economic development, keep prices stable and guard against the financial risks by keeping money and credit supplies at appropriate levels while being cautious and flexible. Though it has been successful for decades, China's investment-driven economic model is no longer seen as sustainable with the consensus being that reforms will be needed to prevent a sudden downturn.