China’s Economy Shows Signs of Revival
After months of sluggish growth, China’s economy is finally showing signs of recovery. The latest purchasing managers’ index (PMI) data reveals that the country’s manufacturing sector has expanded for the first time since April, with a reading of 50.1 in October.
Monetary and Fiscal Policies Take Effect
The improvement is attributed to the government’s efforts to loosen monetary and fiscal policies. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, expects the economic momentum to improve moderately in the fourth quarter. The country’s parliament standing committee is set to meet next week, and is expected to announce details on fiscal stimulus.
Production and New Orders on the Rise
The sub-index for production rose to 52 in October, while new orders reached 50. Although raw materials inventory and employment remain in contraction territory, they showed slight improvements from the previous month. The non-manufacturing PMI also rose to 50.2, with the employment portion increasing by 1.1 percentage points to 45.8.
Manufacturing Output Improves
A separate survey by the U.S.-based China Beige Book found that manufacturing output improved from a year ago. New domestic and export orders also picked up, with export orders from the U.S. falling less sharply in October.
Stocks Rally on Stimulus Hopes
The news has boosted investor confidence, with stocks rallying after a series of high-profile stimulus announcements in recent weeks. The government’s efforts to strengthen fiscal and monetary policy support are expected to continue, providing a much-needed boost to the economy.
Challenges Remain
Despite the positive signs, China’s economy still faces challenges. Consumer demand remains weak, and the real estate market continues to slump. However, exports have been a rare bright spot, and the government’s stimulus efforts are expected to help drive growth in the coming months.
What’s Next?
The Caixin China general manufacturing PMI for October is due out Friday, while the Caixin China general services PMI is scheduled for release on November 5. As the government continues to implement its stimulus policies, investors will be watching closely for signs of sustained economic growth.
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