China's manufacturing shows signs of stabilizing economy

2017-02-01
Xinhua

BEIJING — China’s manufacturing sector expands for the sixth month in a row, adding evidence that the world’s second-largest economy is stabilizing amid uncertain global outlook.

The country’s manufacturing purchasing managers’ index (PMI) came in at 51.3 in January, 0.1 percentage points lower than that recorded in December, according to data released on Feb 1 by the National Bureau of Statistics (NBS).

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

NBS statistician Zhao Qinghe said January’s reading remained at a high level since 2012 and pointed to steady expansion of the manufacturing sector.

The sub-index for production was 53.1, 0.2 percentage points lower than that recorded in December, while the sub-index for new orders was down 0.4 percentage points to 52.8.

Zhao attributed the deceleration of production and new orders to the Lunar New Year holiday, which reduces work days.

China reported 6.7 percent GDP growth in 2016, lower than in recent years but within the government's target range.

Zhao noted that the sub-index for the high-tech manufacturing sector had increased by 1.9 to 55.7, remarkably higher than other sectors

The indices for exports and imports edged up to 50.3 and 50.7 respectively, staying above the 50 demarcation line for three straight months.

The NBS also said that prices of raw materials had posted a decline after several months of increases, creating bigger room for manufacturers to earn profits.

In addition, large companies continued to fare better than smaller ones, as large firms' PMI stood at 52.7, with that for small companies at 46.4.

Zhao said that the steady growth of manufacturing could not conceal the fact that more than 40 percent of business owners had reported cash and labor shortages and weak market demand.

"It is key for policy makers to lower borrowing costs and boost demand to stabilize the economy," he said.

Meanwhile, a separate survey of the service sector showed steady growth, with non-manufacturing PMI up 0.1 to 54.6.

Financial, insurance and Internet and software information technology were among the fastest growing service sectors, while transportation, catering and property sectors reported contractions, NBS data showed.

The service sector accounted for more than half of China's economy last year and for the majority of growth, as rising income made catering, hotels and travel services more affordable for Chinese consumers.