Survey shows China manufacturing expanding

AP News
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Posted: Jan 01, 2010 11:58 AM

An index of China's manufacturing rose in December, expanding at its fastest rate in 20 months amid heavy government economic stimulus, an industry group reported Friday.

The state-sanctioned China Federation of Logistics and Purchasing said its monthly purchasing managers index, or PMI, rose to 56.6 on a 100-point scale, compared with 55.2 in November. Numbers above 50 show manufacturing activity expanding.

It was the biggest month-to-month expansion since last March, when the PMI rose to 52.4 from 49 in the previous month.

The rising index "shows the situation of China's economy is stable and the recovery has been further consolidated," a government economist, Zhang Liqun, said in a statement issued by the federation.

Beijing's 4 trillion yuan ($586 billion) stimulus program has helped boost growth by pumping money into the economy through spending on public works projects. Economic growth rose to 8.9 percent from a year earlier in the quarter ending in September and the World Bank is forecasting 8.4 percent growth for all of 2009.

Premier Wen Jiabao, the country's top economic official, told the government's Xinhua News Agency on Sunday that Beijing will continue its relaxed monetary policies in 2010 rather than drastically withdraw its stimulus.

Jing Ulrich, head of China equities at J.P. Morgan, said in a report that "we expect China's strong economic growth momentum to continue in 2010, with the major source of growth coming from a broad-based improvement in private consumption, and further strengthening in private housing investment, and a solid recovery in exports."

China's PMI index hit 59.2 in April 2008.

Economists see the PMI as a better measure of future economic activity than gross domestic product because it contains forward-looking information such as new orders. The Chinese federation's survey is based on responses from managers who oversee purchasing for some 700 Chinese companies.

The PMI survey is co-sponsored by Hong Kong trading company Li & Fung Ltd.

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On the Net:

China Federation of Logistics and Purchasing (in Chinese): http://www.chinawuliu.com.cn