Editorial | Positive signs emerge but China economy not out of woods yet

One set of numbers in March cannot foretell China’s growth for the year, but it can strengthen signs that the world’s second-biggest economy is rebounding and the key element of confidence is returning.

A case in point is the latest release of a private manufacturing survey, the Caixin/S&P Global purchasing managers’ index (PMI).

It showed China’s manufacturing activity expanded at the fastest pace in 13 months in March, with business confidence hitting an 11-month high.

The driver was new orders from both home and abroad. The PMI of 51.1 per cent – 50 per cent separates growth from contraction – beat economists’ forecasts. It confirmed an official PMI a day earlier also showing improving sentiment among factory owners.

Moreover, Zhao Qinghe, a senior statistician with the National Bureau of Statistics, noted an expanded upwards trajectory of sentiment in 15 of 21 surveyed industries, compared with just five a month before.

Initial reaction among the markets was positive, with the indices coming on top of an assurance by President Xi Jinping to a delegation of business leaders from the United States that the economy was sound, and his promise of more policy support to improve the business environment.