China Experiences Growth in Manufacturing Sector after Hitting 11-Month Low

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China Experiences Growth in Manufacturing Sector after Hitting 11-Month Low
China Experiences Growth in Manufacturing Sector after Hitting 11-Month Low

China Experiences Growth in Manufacturing Sector after Hitting 11-Month Low

Thanks to growing demand from the domestic market, China recorded growth in the manufacturing sector after hitting an eleven month low. For several economists, this may also be an indication that the world’s second-biggest economy is strengthening after a two-quarter slowdown.

Market experts claim that China’s manufacturing growth has started to stabilize on the back of modest improvements of new business and output. In a release by HSBC Holdings Plc and Markit Economics compares with a final figure of 47.7 in July; now, the preliminary reading of 50.1 for a Purchasing Managers’ Index (EC11FLAS).

Expanding Domestic Market Demand

According to some economic analysts the increase in the domestic demand has a lot to do with the Premier Li Keqiang’s plan to boost the national economy as he promised to roll out measures to support growth, including tax breaks for small businesses and an increase in railway investment.

However, exports are disappointing and not improving as an index of export orders slid at a faster pace; now, it is a hard-hitting indication that there is not much in exports to expect; rather focus on the domestic market demand. Despite a sluggish export, the policy makers in China seems confident as for them the domestic demand is strong enough to support 7.5 percent growth in 2013.

It is expected that even if the country can manage its internal demand it can still get around an eight per cent growth rate. In fact, China’s economic data since July shows that there has been a lot of improvement in domestic demand and supply which will fill the gap created by the loss of the export market.

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Still Optimistic to Get the Expected Growth Rate

With expanded domestic demand, China will reach the government’s 7.5 percent growth target this year and may even be able to maintain that pace in 2014. People will have to wait for the reports from The National Bureau of Statistics and China Federation of Logistics and Purchasing as these bodies are going to bring them on September 1.

Market experts claim that domestic demand is being driven by recovery in the property sector wherein the government itself is supporting the new infrastructure. All the effects of the stimulus will show the results in the next couple of months.

Though the experts are skeptical about the sustainability of stimulus and warn of the risks involved in it, they feel it essential for short term growth.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com