China's Manufacturing Sector Shows Modest Growth in March
The official purchasing managers index indicates a stabilizing economy, with positive signals from recent legislative meetings.
China's factory activity recorded modest growth for the second consecutive month in March, bolstered by improved sentiment within the manufacturing sector, according to data released by the National Bureau of Statistics (NBS) on Monday.
The official purchasing managers index (PMI) for manufacturing rose to 50.5 in March from 50.2 in February, marking its highest reading in a year and remaining above the pivotal 50-point threshold that differentiates between expansion and contraction.
Analysts observed an upswing in the mood across the manufacturing landscape, driven by a resurgence in both demand and supply.
The renewed optimism came in the wake of the recent annual meetings of China's top legislative and political advisory bodies, known as the two sessions.
Policymakers are advocating for a shift towards consumption- and innovation-driven growth, which could mitigate the repercussions of tariff increases from the United States, sustain economic momentum, and aid long-term restructuring efforts.
Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, attributed this uptick in the manufacturing PMI to multiple factors.
He noted the full resumption of work and production following the Spring Festival holiday, an uptick in the strategic emerging sectors driven by advancements such as the artificial intelligence model DeepSeek, and ongoing stimulus measures designed to invigorate consumption and investment.
The positive sentiment fostered by the two sessions was also highlighted as a contributor to this growth.
According to Wang, the latest figures reflect seasonal recovery trends along with the effectiveness of pro-growth policies.
He projected that China's GDP growth could reach approximately 5 to 5.2 percent year-on-year in the first quarter.
Wang also indicated that, in light of the US tariff impacts and challenges in the real estate sector, he expects increased countercyclical policy adjustments.
He anticipates a potential reopening of avenues for reducing interest rates and reserve requirement ratios in the second quarter.
The NBS data also revealed the non-manufacturing PMI, which encompasses the services and construction sectors, rose to 50.8 in March from 50.4 in February.
Furthermore, the overall composite PMI, which combines both manufacturing and non-manufacturing activities, increased to 51.4 in March, up from 51.1 in February.
Fitch Ratings articulated an expectation for a shift in China's growth dynamics this year, with a stronger emphasis on domestic demand as the primary growth driver.
The agency noted that while US trade policies pose challenges for China — both directly and through slower global economic growth — looser fiscal and monetary policies along with currency depreciation could partly counter these effects.
Additionally, indications of stabilization in the property market may alleviate some of the sector’s negative influence on overall economic investment.
In the 2023 Government Work Report, a commitment to a "more proactive fiscal policy" was established, contrasting with the previous designation of a "proactive fiscal policy." This year, the projected fiscal deficit-to-GDP ratio is set at around 4 percent, up from 3 percent in 2022 and representing the highest level since records began in 2010.
Ben Simpfendorfer, a partner at Oliver Wyman consultancy, remarked that China's robust fiscal stimulus is essential for supporting its economy amidst various global challenges.
He described the annual growth target of around 5 percent as both reasonable and practical.
The report cited the critical importance of consumption and innovation-led growth for the Chinese economy, with Simpfendorfer emphasizing that the nation’s growth strategy hinges not only on short-term outcomes but also on long-term structural adjustments.
He outlined China's unique growth narrative, characterized by a vast consumer market, an extensive manufacturing infrastructure, and state-led resource mobilization.
Marc Horn, executive vice-president of Merck and president of Merck China, expressed confidence in the prospects for China's economy, citing strong affirmations during the two sessions.
Merck views China as its second-largest market and a vital hub for innovation, having invested approximately 7 billion yuan (around $965 million) in various sectors, including electronics, healthcare, and life sciences over the past decade.
The official purchasing managers index (PMI) for manufacturing rose to 50.5 in March from 50.2 in February, marking its highest reading in a year and remaining above the pivotal 50-point threshold that differentiates between expansion and contraction.
Analysts observed an upswing in the mood across the manufacturing landscape, driven by a resurgence in both demand and supply.
The renewed optimism came in the wake of the recent annual meetings of China's top legislative and political advisory bodies, known as the two sessions.
Policymakers are advocating for a shift towards consumption- and innovation-driven growth, which could mitigate the repercussions of tariff increases from the United States, sustain economic momentum, and aid long-term restructuring efforts.
Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, attributed this uptick in the manufacturing PMI to multiple factors.
He noted the full resumption of work and production following the Spring Festival holiday, an uptick in the strategic emerging sectors driven by advancements such as the artificial intelligence model DeepSeek, and ongoing stimulus measures designed to invigorate consumption and investment.
The positive sentiment fostered by the two sessions was also highlighted as a contributor to this growth.
According to Wang, the latest figures reflect seasonal recovery trends along with the effectiveness of pro-growth policies.
He projected that China's GDP growth could reach approximately 5 to 5.2 percent year-on-year in the first quarter.
Wang also indicated that, in light of the US tariff impacts and challenges in the real estate sector, he expects increased countercyclical policy adjustments.
He anticipates a potential reopening of avenues for reducing interest rates and reserve requirement ratios in the second quarter.
The NBS data also revealed the non-manufacturing PMI, which encompasses the services and construction sectors, rose to 50.8 in March from 50.4 in February.
Furthermore, the overall composite PMI, which combines both manufacturing and non-manufacturing activities, increased to 51.4 in March, up from 51.1 in February.
Fitch Ratings articulated an expectation for a shift in China's growth dynamics this year, with a stronger emphasis on domestic demand as the primary growth driver.
The agency noted that while US trade policies pose challenges for China — both directly and through slower global economic growth — looser fiscal and monetary policies along with currency depreciation could partly counter these effects.
Additionally, indications of stabilization in the property market may alleviate some of the sector’s negative influence on overall economic investment.
In the 2023 Government Work Report, a commitment to a "more proactive fiscal policy" was established, contrasting with the previous designation of a "proactive fiscal policy." This year, the projected fiscal deficit-to-GDP ratio is set at around 4 percent, up from 3 percent in 2022 and representing the highest level since records began in 2010.
Ben Simpfendorfer, a partner at Oliver Wyman consultancy, remarked that China's robust fiscal stimulus is essential for supporting its economy amidst various global challenges.
He described the annual growth target of around 5 percent as both reasonable and practical.
The report cited the critical importance of consumption and innovation-led growth for the Chinese economy, with Simpfendorfer emphasizing that the nation’s growth strategy hinges not only on short-term outcomes but also on long-term structural adjustments.
He outlined China's unique growth narrative, characterized by a vast consumer market, an extensive manufacturing infrastructure, and state-led resource mobilization.
Marc Horn, executive vice-president of Merck and president of Merck China, expressed confidence in the prospects for China's economy, citing strong affirmations during the two sessions.
Merck views China as its second-largest market and a vital hub for innovation, having invested approximately 7 billion yuan (around $965 million) in various sectors, including electronics, healthcare, and life sciences over the past decade.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
