China’s Manufacturing Output Picks Up

China is now the world’s second largest economy and as such, the fortunes of the nation in economic turns have an impact in other lands. China represents an enormous market for the rest of the world, being the most populace nation on the planet. However, whilst China’s limited experiment with capitalism has made some people fabulously wealthy, the benefits have largely failed to reach the majority of its citizens. Consequently, demand for exported goods within China remains limited. China exports a wide array of goods to the rest of the world and also imports substantial quantities of raw materials.

China’s economy has been slowing as demand around the world has weakened. This has led to a downturn in China’s manufacturing sector over recent months, but recent data suggests this trend has reversed. The Chinese (state) Purchasing Manager’s Index hit a 7-month high in November with a value of 50.6, building on a value of 50.2 for October. With this style of index, a value above the 50 mark represents expansion whereas a lower value indicates contraction. Independent data from banking giant HSBC confirms the trend. Their own Purchasing Manager’s Index has recorded a 13-month high improving from October’s level of 49.5 to 50.5 for last month.

Analysts suggest that the improved figures stem from government efforts to boost the manufacturing sector which is seen as the engine of growth for the Chinese economy. The performance of the Chinese economy in the second quarter – whilst stellar in comparison to its major competitors – was the weakest level of growth seen in three years. The lack-lustre performance was largely due to declining demand for Chinese goods in importing countries as they deal with their own economic problems.