China’s manufacturing sector experienced growth in September, marking its first expansion in six months, according to an official survey released on Saturday. This positive development serves as another indication that the world’s second-largest economy is gradually recovering from the impact of the pandemic.
The monthly purchasing managers’ index (PMI), a key indicator of manufacturing activity, rose to 50.2 in September from 49.7 in August, measured on a 100-point scale. A reading above 50 suggests an increase in activity.
The National Bureau of Statistics and the China Federation of Logistics & Purchasing reported that measures of production, new orders, and employment all saw improvements compared to August. However, senior statistician Zhao Qinghe cautioned that the manufacturing industry still faces challenges in its recovery and development.
China has been implementing various measures to boost its economy after lifting stringent COVID-19 restrictions. The government aims to support entrepreneurs who can generate jobs and contribute to wealth creation. While certain sectors, including factory output and retail sales, have shown signs of improvement, China’s property market remains a concern, posing a drag on overall economic growth.
Official data also revealed growth in non-manufacturing commercial activities, with the index rising to 51.7 in September from 51 in August. The composite index, which measures both manufacturing and non-manufacturing activity, increased to 52 from 51.3.
Zhao highlighted that the latest indexes indicate a rebound in economic activity. As government policies take effect, positive factors for economic growth are on the rise.
Nevertheless, China’s economic recovery remains uneven. Real estate developers are grappling with heavy debts amid weak demand. Last month, investment in real estate dropped by 8.8% compared to the previous year.
Adding to the economic pressures, the heavily indebted Chinese property developer, China Evergrande Group Investment, recently halted trading of its shares in Hong Kong. The company stated that its chairman, Hui Ka Yan, was subjected to mandatory measures in accordance with the law due to suspicion of illegal crimes.
In the second quarter of this year, China’s economy grew at a rate of 6.3% annually, considerably slower than the 7%-plus growth forecast by analysts based on the sluggish pace of activity seen the previous year. Moreover, the record-high unemployment rate for young workers, with about one in five unemployed, further weighs on consumer spending.
China’s recent manufacturing expansion offers hope for its economic recovery. However, challenges persist, particularly in the property market and employment sector. As China navigates through these uncertainties, it will be crucial to sustain and strengthen efforts to support its manufacturing industry and boost job creation to drive long-term economic growth.
