Beijing, China – The Purchasing Managers’ Index (PMI) in China showed promising signs of growth, marking its highest reading since March of the previous year. Analysts suggest that domestic supply and demand have improved, alongside recovering homeowner and business confidence. Although new export orders saw a positive uptick after an 11-month decline, the data also indicated a continued decrease in employment, albeit at a slower pace.
Recent positive indicators indicate a gradual recovery for the world’s second-largest economy, prompting analysts to revise their growth forecasts for the year. Policymakers have been grappling with ongoing economic challenges following the easing of COVID-19 restrictions in late 2022, compounded by a housing crisis, local government debts, and weakening global demand.
According to experts, the Chinese economy is poised for a strong finish to the first quarter of the year. Notably, hiring has shown consistent improvement, with manufacturing and retail sectors picking up momentum. However, the property sector’s significant downturn remains a key hindrance to overall growth, posing challenges to local governments and state-owned banks.
In a positive development, the official non-manufacturing PMI, which includes services and construction, saw an increase to its highest level since September. Premier Li Qiang announced an ambitious economic growth target for 2024, aiming for around 5% growth. Analysts caution that achieving this target may require additional stimulus measures, especially without the boost from a favorable statistical base year like 2022.
Some financial institutions, like Citi, have raised their economic growth projections for China, citing recent positive data and policy initiatives. A plan approved by China’s cabinet in March highlights efforts to stimulate market demand through equipment upgrades and consumer goods sales. Despite these measures, concerns persist about the potential for stagnation in the future if policymakers do not prioritize shifts towards household consumption and market-driven resource allocation over heavy infrastructure investments.