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In July, HSBC's “preview†China PMI index rose to 52.
In a survey conducted around the PMI index, readings above 50 indicate that the respondent's business is growing. The index shows that China's industrial base has been shrinking in the first five months of 2014, and it began to expand in the last month.
To ensure that the 7.5% GDP growth target is achieved in 2014, the Chinese government has relaxed its control over credit. For this reason, China's money supply in June this year showed the fastest growth rate in three months, and the resulting cash flowed to infrastructure and real estate projects that could drive economic development.
However, according to estimates by Standard Chartered, China's total debt has now surged to 2.5 times GDP. This highlights the challenge faced by policymakers: they must ensure the growth of financing while preventing the hidden dangers of the financial crisis.
Qu Hongbin, an economist at HSBC, said: “China’s economic activity continues to improve in July, meaning that the cumulative effect of the micro-stimulus measures introduced earlier is still infiltrating into the economy. We expect to consolidate this recovery in the next few months. Policymakers will continue to maintain this loose policy stance."
China's manufacturing industry has the fastest expansion in 18 months
Abstract HSBC's preview of the Purchasing Managers' Index (PMI) shows that China's industrial activity has reached its busiest level since January last year. Prior to this, there was a rapid increase in credit in this highly leveraged economy. In July, the exchange...
HSBC's preview of the Purchasing Managers' Index (PMI) shows that China's industrial activity has reached its busiest level since January last year. Prior to this, there was a rapid increase in credit in this highly leveraged economy.