Written by Yuhua Zhang, GEI Associate
In April and May, China official manufacturing PMI (Pruchasing Mangers’ Index) showed stable growth from 50.1 to 50.2. It is the consecutive third month that official manufacturing PMI recovers over 50 percent, which indicates Chinese manufacturing factories operate in more stable economic expansion during the past few months. In the meanwhile, although non-manufacturing PMI decreased from 53.4 to 53.2, business of service industry still continue to maintain growth.
During the period of economic reform, China manufacturing industry shows slight growth and non-manufacturing industry still maintains a quite high level in the two most recent months, which indicates reward of pro- growth policies launched by Chinese authorities and gradually consolidation of Chinese economic foundation.
Moreover, Chinese new order index also rebounded in May, rose from 50.2 to 50.6, which recovers to the same term level of last year. Correspondingly, industrial production also maintained slight growth, thus market demand and vitality are improved in the past two months, which shows significant positie results for government policy that aims to strengthen sustainable economic growth.
Based on a recent analysis by Jin Cai, vice-chairman of China Federation of Logistics & Purchasing, there are four main positive aspects we can expect from the modest improvement of PMIs.
First, the rebound of new order index may further improve and stable market demand, thus brings persistent impetus of economic growth.
Second, better economic environment would lead higher benefits to enterprises, and provide better opportunity for corporations to expand their business scale.
Third, some other industries such as retail, information, tourism were improved correspondingly, which would effectively strengthen final consumption power for the market.
Fourth, the recovery of economic operation would also lead a more steady developmental level and operating trend for Chinese real estate industry.
