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HomeBusinessChina's economy stabilizes as manufacturing expands again.

China’s economy stabilizes as manufacturing expands again.

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China’s factory activity expanded in September for the first time in six months, according to an official survey. The purchasing managers’ index (PMI) rose to 50.2, above the 50-point level that signifies the boundary between contraction and expansion. This positive data indicates that China’s economy is showing signs of stabilizing after a period of slowdown caused by COVID-19 restrictions. In August, there were already preliminary signs of improvement, including growth in factory output and retail sales, narrowed declines in exports and imports, and a 17.2% increase in industrial profits.

The non-manufacturing PMI, which includes service sector activity and construction, also rose in September, reaching 51.7 compared to August’s 51.0. Meanwhile, the composite PMI, which combines both manufacturing and non-manufacturing activity, climbed from 51.3 to 52.0. These indicators further support the idea that China’s economy is gradually recovering. However, the property sector remains a risk, with new home prices falling in August and property investment declining for the 18th consecutive month.

The Chinese government has implemented measures to support the property market, such as reducing mortgage rates, but additional policy support may be necessary to achieve the government’s growth target of approximately 5% for this year. Analysts believe that fiscal policy may become more supportive in the future, but any changes in policy stance are likely to occur next year rather than in 2022. Overall, while China’s economy is showing signs of stabilization, it still faces challenges, particularly in the property sector, which will require continued attention from policymakers.

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