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Last Updated:[03-12-2012 04:46:16 EDT] Zoom in Zoom out Back to Tradenews

Factory surveys show China reviving, global rebound fragile



tradenews BEIJING: China's economy picked up in November but a broader global recovery remains fragile and patchy, a clutch of factory surveys suggested on Monday, with activity elsewhere in Asia remaining subdued amid depressed demand from the developed world.

The euro zone, where factory surveys are due later, is on course for its worst quarter since the depths of the global financial crisis in early 2009. The US picture is brighter, but manufacturing growth is still seen slowing in the fourth quarter.

The big emerging economies that have contributed most to global growth in recent years have been sputtering of late, with India expected to post its weakest full-year GDP expansion in a decade and Brazil logging an unexpectedly weak third quarter.

That has left investors once again hoping China will take up the slack, and evidence has been accumulating since late September that the Chinese economy is regaining its vigour after seven straight quarters of slowing growth.

"There is growing confidence that China's economy bottomed in July-September, with signs of firmer external demand," said Hirokazu Yuihama, a senior strategist at Daiwa Securities.

Monday's final reading of HSBC's China manufacturing Purchasing Managers' Survey (PMI) rose to 50.5 in November from 49.5 in October, the first time since October 2011 the headline number has topped the 50-point line that demarcates growth and contraction from the previous month.

"This confirms that the Chinese economy continues to recover gradually," HSBC's chief China economist Hongbin Qu wrote.

It followed a similar survey from the National Bureau of Statistics, released on Saturday, that showed the pace of growth in the manufacturing sector quickening. The official PMI rose to a seven-month high of 50.6 for November, from 50.2 in October.

But contained within the official data were potentially worrying signs that the Chinese economy has failed to shed its heavy reliance on state-led investment.

Growth accelerated for large firms for the third month in a row, but medium and smaller companies saw a retrenchment, with the decline more pronounced for the smaller firms, the National Bureau of Statistics said in an accompanying note.

"The improving numbers are mostly because of government investment," said Dong Xian'an, economist with Peking First Advisory, referring to the official PMI.

"From the second quarter the government has unleashed a lot of projects, and that has started to be felt in the economy, but it's not a very healthy recovery yet."


Source : Economic Times




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