by Staff Writers
Beijing (AFP) May 31, 2017
Activity in China's key factory sector expanded in May, official data showed Wednesday, in a sign of stabilisation in the world's second-largest economy.
Recent indicators have pointed to slowing growth in the Asian economic giant as it grapples with weaker global demand, excess industrial capacity and a burgeoning debt problem.
But the latest purchasing managers' index, a gauge of factory conditions, came in at 51.2, the National Bureau of Statistics (NBS) said, unchanged from the previous month.
Analysts surveyed by Bloomberg News had expected a reading of 51.
A figure above 50 indicates growth in the sector, which has long been a major driver of the Chinese economy, while anything below points to contraction.
An expansion in market supply and demand as well as an acceleration in consumer goods manufacturing contributed to the result, NBS analyst Zhao Qinghe said.
"While Chinese growth may have slowed from earlier this year, it looks to have stabilised at a level that is still solid and consistent with the official 6.5 percent (gross domestic product) target," said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney.
Tommy Xie, an economist at OCBC Bank in Singapore, said PMI would probably stay above 50 for the rest of the year as the global economy recovers.
But he warned tighter credit conditions and higher borrowing costs for factories would "inevitably slow growth".
China is transitioning from an investment-driven economic model to one more reliant on consumer spending, which has put the brakes on growth in recent years.
But Beijing hopes that its Belt and Road initiative, an ambitious infrastructure project aimed at reviving ancient trading routes from Asia to Europe and Africa, could provide fresh impetus for economic activity.
Mumbai (AFP) May 31, 2017
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