China's factory output up but export orders dive
Survey raises concern over pace of mainland's economic growth after first-quarter slowdown
Reuters in Beijing
Activity at mainland factories rose marginally last month but export orders fell sharply, a government survey showed, adding to questions about whether the world's second-largest economy is stabilising after its first-quarter slowdown.
The data came after Premier Li Keqiang pledged on Wednesday to step up support for the trade sector. This was in addition to measures taken over the past month on concerns that the economy may be losing momentum more quickly than expected.
The purchasing managers' index rose to 50.4 last month from March's 50.3, the National Bureau of Statistics said, one of the first indicators of how the economy started the second quarter.
At just above the 50 level that separates growth from contraction, it indicated a slight pickup in activity for the month, although it was below expectations.
Zhang Liqun, an economist at the Development Research Centre, which helps compile the PMI, said the index pointed to stabilising economic growth ahead, but others disagreed.
"We do not believe the economy has passed a turning point," said Zhang Zhiwei, a China economist at Nomura.
Zhang Zhiwei expected annual economic growth to slow to 7.1 per cent in the second quarter from an 18-month low of 7.4 per cent in the first, adding the risks were to the downside.
The new orders subindex in the PMI rose to 51.2 from 50.6 in March, but the subindex for export orders fell to 49.1 from 50.1. Exports fell in annual terms for a second consecutive month in March, the weakest run since 2009.
The official PMI is weighted more towards bigger and state-owned enterprises and tends to paint a rosier picture than one compiled by HSBC and Markit Economics, which focuses more on smaller private firms.
A preliminary reading of the HSBC/Markit PMI last week showed factory activity shrank last month for a fourth consecutive month, although at a slower pace than in March. The final reading is due on Monday.
Meanwhile, Li said the mainland would not relent by loosening policy to shore up its economy or calm a volatile yuan, even though it had entered a "painful" phase of restructuring.
In remarks published yesterday in the Communist Party's influential Qiushi (seeking truth) journal, the premier said the government was comfortable with a slowing economy as long as growth stayed within a "reasonable range".
He said the mainland needed fortitude in dealing with its cooling economy.
"We will stick to our convictions, and not dance to the frequent fluctuations in markets, not change policy because of divergent voices, and will persist in not expanding the budget deficit," he wrote. "Even if there are short-term fluctuations in the currency market, we will face it calmly."
Li'is remarks came as the yuan hit an 18-month low on Wednesday.