AFP, (24/10) -- China's manufacturing activity expanded at its
strongest pace in seven months in October, British banking giant HSBC
said Thursday, adding to evidence the world's second-largest economy is
recovering.HSBC's preliminary purchasing managers' index (PMI)
for this month hit 50.9, a significant improvement from September's 50.2
and the highest since 51.6 in March.The index tracks
manufacturing activity in China's factories and workshops and is a
closely watched gauge of the health of the economy. A reading above 50
indicates growth, while anything below signals contraction.The
strong performance in October came on the back of 'broad-based modest
improvements' in the Chinese economy, said Qu Hongbin, an HSBC economist
in Hong Kong, in a statement accompanying the data.'This
momentum is likely to continue in the coming months, creating favourable
conditions for speeding up structural reforms,' he said.The October PMI reading may help alleviate market concerns over the sustainability of China's recovery.Growth
in July-September hit 7.8 percent year-on-year, snapping two quarters
of slowing expansion, according to official data released last week.The
jump was mainly a result of government stimulus since late June that
featured increased rail and urban fixed-asset investment, tax cuts and
looser monetary policy, analysts said.But the country's rising
inflation and excess market liquidity are limiting room for further
monetary loosening, while skyrocketing local government debt and slowing
fiscal revenue growth are restricting the scope for more tax
incentives, they said.
