Sat, 02 Dec 2023

BEIJING, China: Official statistics released on the weekend showed that in September, Chinese factory activity expanded for the first time in six months.

According to the National Bureau of Statistics, the purchasing managers' index (PMI), based on a survey of major manufacturers, rose to 50.2 in September from 49.7, beating a forecast of 50.0.

The 50-point level is the boundary between contraction in activity and expansion.

These statistics add to signs of the Chinese economy's stabilization after an initial surge of momentum early this year when China's ultra-restrictive COVID-19 policies were lifted.

In August, factory output and retail sales growth accelerated while declines of exports and imports narrowed and deflationary pressures eased.

Zhou Hao, chief economist at Guotai Junan International, said, "The manufacturing PMI, plus the good industrial profit figures, suggest that the economy is gradually bottoming out."

As they continue to struggle with a property sector debt crisis that has shaken international markets, the indicators for a more stable economy will be welcomed by Chinese policymakers.

With the property sector still far from showing any signs of recovery, authorities in Beijing have announced a series of measures to support the property market, including reducing mortgage rates.

Due to this weakness in the country's property sector, last week, the Asian Development Bank reduced its 2023 economic growth forecast for China to 4.9 percent from a July figure of 5.0 percent.

Some analysts believe that to ensure China's economy can reach the government's growth target of about five percent this year, more policy support will be required.

Zhiwei Zhang, chief economist of Pinpoint Asset Management, said, "The key issue going forward is whether fiscal policy will become more supportive. I think it will, but timing-wise the change of fiscal policy stance may happen next year instead of this year."

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