China’s manufacturing has expanded for the first time after almost 13 months this November showing signs of a recovery from a slump that can be attributed to the global financial crisis in 2008.
Expecting caution from China’s leadership in light of these positive developments, chairwoman of China equities at JP Morgan, Jing Ulrich, said, “I think they will fine-tune monetary policy and fiscal policy and they will make targeted new investments, not massive investments.”
According to the HSBC’s monthly Purchasing Managers’ Index, where readings above 50 indicate expansion, it is for the first time in 13 months that the reading has risen above the 50-point mark at 50.4 while October’s readings stood at 49.5.
These encouraging numbers proved to be a boost to the world economy which has slowed down, thanks to the stagnation of the American economy and the European debt crisis taking a turn for the worse. Not only has crude oil prices gone up but gains were posted by benchmark stock indices in Japan, Britain, Hong Kong and Germany.
Yet HSBC economist Qu Hongbin reveals that the survey, which usually captures data related to orders, employment and actual production, shows that China’s economic recovery is on the rise but it continues to remain fragile. What is crucial, according to the analyst, is “the continuation of policy easing to strengthen the recovery”.
Other analysts have suggested a cautious approach as China’s recovery will be L-shaped and which indicates that while the decline has stopped, improvements in growth will be gradual.
This HSBC report compiles data from questionnaires that are sent to purchasing executives of more than 420 companies.