China’s manufacturing unexpectedly rebounded in December on holiday shopping, official data showed yesterday, as the world’s number two economy showed some resilience despite strife in key export markets.
The purchasing managers index (PMI) reached 50.3 in December, the China Federation of Logistics and Purchasing said in a statement.
A reading above 50 indicates the sector is expanding while a reading below 50 suggests a contraction.
The group attributed the rebound to seasonal factors, as manufacturers ramped up production to meet higher demand from holiday shoppers for Christmas and Chinese New Year, which falls in January.
Manufacturing returned to expansion last month after contracting for the first time in 33 months in November, when the PMI fell to 49 – down 1.4 points from October – due to weaker demand from Europe and the United States.
The market had expected the index to remain steady at 49 in December, according to a poll by Dow Jones Newswires.
“The rebound in December PMI indicates China’s future economic growth will not have a big slowdown,” Zhang Liqun, a researcher at government think-tank the Development Research Centre, said in the statement.
But he added the economy had been affected by a slowdown in developed countries and a shift in China’s own economic drivers in 2011, as the government turns more towards domestic consumption.
The latest reading of official PMI showed a split from another measure by banking giant HSBC, which Friday said its indicator reached 48.7 in December.
Beijing is anxious to prevent a sharp slowdown in the economy but at the same time it wants to avoid reigniting inflation, which hit a more than three year high of 6.5 per cent in July but has since slowed.
In a bid to boost growth and counter turmoil in Europe and the United States, leaders in December cut the amount of money banks must hold in reserve for the first time in three years.
Lu Zhengwei, a Shanghai-based economist at China’s Industrial Bank, said the rebound in PMI showed the recent cut in the reserve ratio requirement for banks was having an impact.
“After the shift to a loosening policy, the economy is already starting to reach bottom and stabilise,” he said in a note.
China’s economy grew an estimated 9.0 percent or more year on year in 2011, the official Xinhua News Agency said in a commentary late Saturday.
But that is slower than 2010, when annual economic growth rose more than 10 percent.
Growth is widely expected to slow even further this year.
China faces an “arduous” ask in maintaining economic growth, the Xinhua commentary said.
President Hu Jintao on Saturday vowed that the country would strive for “steady and relatively fast” economic growth this year, in his annual New Year address broadcast on state television. He gave no target.
State media Sunday criticised those predicting “economic collapse” for China, saying the economy will remain strong.