China factory activity returns to growth in September

BEIJING: Factory activity in China crept back to growth in September, official data showed Wednesday (Sep 30), providing a positive sign for the country's leaders after two months of contraction.

The data came after Beijing announced a stimulus package to offset economic strains and low spending in the world's second-largest economy.

The manufacturing purchasing managers' index (PMI), a closely watched gauge of industrial health, came in at 50.1 this month, just above the 50 mark separating expansion from contraction.

The data from the National Bureau of Statistics was in line with the forecast in a Bloomberg survey of economists and an improvement of the 49.8 and 49.2 recorded in July and August respectively.

NBS statistician Huo Lihui said in a statement it showed "that there has been recovery in economic (conditions)".

Huo noted that "three key industries show rapid expansion", including equipment manufacturing, high-tech manufacturing and the consumer goods industries.

"Production and operations in the relevant industries remained robust overall," he added.

The non-manufacturing PMI, which measures activity in other areas including services and construction, came in at 50.2, the data showed.

That outstripped a Bloomberg forecast of 49.2 and was up from last month's 49.0.

"The construction industry's business activity index rose to its highest level this year," Huo added.

Leaders in Beijing are seeking to maintain economic pace despite hurdles including trade frictions with Washington and an entrenched property-sector crisis that has spooked consumers.

Beijing on Monday announced "a package of pragmatic and effective incremental policy measures" to support the economy.

The government will introduce measures aimed at stabilising the property market and promoting employment and income growth, state news agency Xinhua said.

On Tuesday, the People's Bank of China followed suit, announcing measures to reduce credit costs in sectors including infrastructure and technology, and to offer more subsidies to home buyers.

The central bank will also broaden loans to support investment in water, power-grid, computing, communications, urban pipeline and logistics networks, it said.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, warned that while the stimulus policies are "another step in the right direction", they might not be adequate to stabilise the economy alone.

"The fiscal subsidies are confined to apartment transactions less than 1.5 million yuan (US$224,000) in value. Most apartments (in key cities)... don't qualify as they are more expensive," he said.

Nevertheless, he added, "policy makers are taking a new approach", and the move marks "one step forward to address the problem properly".

China's economy has been supported by a historic boom in exports that has shown no sign of stopping in recent months.

It has also been helped by the global artificial-intelligence frenzy that has increased demand for its tech products.