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Finance & Economy

China January PMIs signal mild recovery in place

Chinese Shoe FactoryChina’s giant manufacturing sector extended its mild recovery in January with weak foreign demand still crimping growth, a pair of surveys showed, underscoring that the country’s rebound from its worst downturn in 13 years remains modest.

Two separate versions of the purchasing managers’ index (PMI) released on Friday showed factory output in the world’s second-largest economy rose in January, but at starkly different speeds suggesting a patchy revival in activity.

An official PMI compiled by the government showed factory sector growth was slower-than-expected in January, with the index rising to 50.4, below market forecasts for a nine-month high outcome of 50.9 and a touch below December’s 50.6.

A private PMI survey released by HSBC, on the other hand, showed growth among manufacturers quickening to a two-year high of 52.3 in January, better than the flash, or preliminary, reading of 51.9, as domestic demand aided business.

“January’s PMI does raise some red flags about the state of the economy,” said Alistair Thornton, an economist at IHS Global Insight in Beijing. “Things look a little shaky.”

The official and HSBC PMI surveys on China often do not move in tandem due to their different sampling methods. The official PMI favours big state factories while the HSBC PMI favours smaller private manufacturers.

Both surveys showed manufacturers were helped by firm domestic demand, but buffeted by lackluster foreign demand as shoppers in the United States and Europe, the two biggest buyers of Chinese exports respectively, cut back spending.

The National Bureau of Statistics said the official survey showed that manufacturers focused on domestic consumption had done particularly well in January, while those levered to the electronics and shipping sectors had fared worst.

The results support expectations that the unfolding economic recovery in China is powered from home by rising state investment and resilient private consumption.


The Chinese economy posted its worst annual growth since 1999 last year at 7.8 percent. Analysts polled by Reuters last month forecast things could pick up slightly this year and next with the economy growing 8.1 percent.

The official PMI has been above the 50-point level demarcating growth or contraction from the previous month since August 2012, though its failure to break above 51 indicates that the economic expansion it signals is only moderate.

The NBS said on Friday it had expanded the sample size for the official PMI survey to 3,000 firms from the previous 820 across 31 industries from January 1, without explaining the change.

It did not say if historical data would be revised with the changes, and gave no assessment of how the change might affect index readings.

But signs that the economic recovery — albeit gentle — was gaining strength were evident in both surveys on Friday.

The new orders sub-index in the official PMI inched up to a nine-month high of 51.6, while that for the HSBC PMI climbed to a two-year high of 53.7.

In contrast, the sub-index for export orders was more muted. It stood at 48.5 for the official PMI and was just a shade above 50 in the HSBC survey.

“We see increasing signals of a sustained growth recovery in coming months,” said Qu Hongbin, chief China economist at HSBC.

“The steady investment growth led by infrastructure projects, improving labour market conditions boosting consumer spending, and the ongoing re-stocking process to lift production growth,” he said in a statement.

The quantity of purchases sub-index also hit a nine-month peak in the official PMI, with its rise to 53.2 another indication that the destocking process that had dragged on China’s industrial output through 2012 was over.

And in line with busier production, both surveys showed price pressures were quickly building up.

The HSBC PMI showed the input prices sub-index jumping to its highest since September 2011, while the official PMI showed the input price sub-index zooming to a 17-month high of 57.2.

Although both PMI surveys are seasonally adjusted, some analysts cautioned against reading too much into the data due to distortions from the Lunar New Year holiday, which fell in January last year and is in February this year.

“We believe the Chinese economy and its related asset markets will remain in a sweet spot in the near-term,” Ting Lu, chief China economist with Bank of America/Merrill Lynch wrote in a note to clients.

Source: Reuters “China January PMIs signal mild recovery in place”

About chankaiyee2

Author of the book "Tiananmen's Tremendous Achievements" about how with the help of Tiananmen Protests, talented scholars with moral integrity seized power in the Party and state and brought prosperity to China. The second edition of the book will be published within a few days to mark the 25th anniversary of Tiananmen Protests All the parts in the first edition remain in the second edition with a few changes due to information available later and better understanding. There are also some changes for improvements of style. The new parts are Chapters 12-19 on events in China after the first edition was published: The fierce power struggle for succession between reformists and conservatives; Xi Jinping winning all elders’ support during his mysterious disappearance for 2 weeks in early September, 2012; and Xi Jinping Cyclone. Chan Kai Yee's new book: SPACE ERA STRATEGY: The Way China Beats The US An eye-opening book that tells the truth how the US is losing to China. The US is losing as it adopts the outdated strategy of Air-Sea Battle while China adopts the space era strategy to pursue integrated space and air capabilities: It is losing due to its diplomacy that has given rise to Russian-Chinese alliance. US outdated strategy has enabled China to catch up and surpass the US in key weapons: Hypersonic weapons (HGV) that Pentagon regards as the weapon that will dominate the world in the future. Aerospaceplane in China’s development of space-air bomber that can engage enemy anywhere in the world within an hour and destroy an entire aircraft carrier battle group within minutes. Anti-satellite (ASAT) weapons, anti-ASAT weapons, stealth aircrafts, drones, AEW&C, etc. The book gives detailed descriptions of China’s weapon development based on information mainly from Chinese sources that the author monitors closely. U.S. Must Not Be Beaten by China! China is not a democracy. Its political system cannot prevent the emergence of a despotic leader or stop such a leader when he begins to bring disasters to people. A few decades ago, Mao Zedong, the worst tyrant in world history did emerge and bring disasters to Chinese people. He wanted to fight a nuclear war to replace capitalism with communism but could not bring nuclear holocaust to world people as China was too weak and poor at that time. If a despot like Mao Zedong emerges when China has surpassed the US in military strength, world people will suffer the misery experienced by Chinese people in Mao era. China surpassing the US in GDP is not something to worry about as China has the heavy burden to satisfy its huge population, but China surpassing the US in military strength will be world people’s greatest concern if China remains an autocracy. US people are of much better quality than Chinese people. What they lack is a wise leader to adopt the correct strategy and diplomacy and the creative ways to use its resources in developing its military capabilities. I hope that with the emergence of a great leader, the US can put an end to its decline and remain number one in the world. China, US, space era strategy, air-sea battle, space-air bomber, arms race, weapon development, chan kai yee



  1. Pingback: January reading of China’s PMI at highest level for 2 years « China Daily Mail - February 8, 2013

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