China's manufacturing growth hits 3-year high in June
But businesses are challenged by lower confidence and expectations.
China's manufacturing sector grew at its fastest rate in three years in June, driven by strong production and stabilizing employment. The Caixin China General Manufacturing Purchasing Managers' Index (PMI) rose to 51.8 in June, a slight increase from the previous month.
June's reading remained above the 50-point benchmark that divides expansion from contraction and marked the fastest growth in activity since May 2021.
The Caixin PMI mainly tracks activity at smaller, private firms. The official PMI largely focuses on state-owned and big manufacturing companies.
The National Bureau of Statistics (NBS) said that the official PMI came in at 49.5, unchanged from the reading in May.
Even as complex external challenges that include growing trade protectionism confront Chinese businesses, an increasing number of policy measures designed at continuing to stabilise growth and improve the business environment will continue to boost vitality and improve business confidence, analysts said.
Li Chang'an, a professor from the Academy of China Open Economy Studies at the University of International Business and Economics, noted that Caixin PMI index concentrates on private and small- and medium-sized enterprises, reflecting the recovery and development of these enterprises, and it is an important indicator of the continued consolidation and recovery of the economy.
Li emphasised that the data show that small and medium enterprises are in a state of expansion. This reflects the improvement of expectations and market vitality.
Businesses however continue to face many challenges, including a relatively lower level of expectations and confidence.
An NBS statistician Zhao Qinghe opined that judging from the output, China's economy generally maintained expansion, but the foundation for continued recovery still needs to be consolidated.
Considering the continuous support from policy measures and continuously deepening reform, market confidence will continue to improve, Cong Yi, a professor at the Tianjin School of Administration stressed.
