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China economy stabilized in Dec

China economy stabilized in Dec

BEIJING: China’s economy may have stabilized further in December as both manufacturing and services activities improved, two surveys showed yesterday.

The official Purchasing Managers’ Index, a comprehensive gauge reflecting operational conditions in largely state-owned manufacturing companies, rose 0.1 from November to 49.7 in December, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.

The figure represented the first rebound in four months although still in contraction. The demarcation line between expansion and contraction is set at 50.

Meanwhile, the official non-manufacturing PMI, a counterpart for the services sector, improved to 54.4 last month, the highest in more than a year.

More market demand

The gains were partly due to various celebrations at the end of the year that stimulated services such as tourism, catering and entertainment.

Bureau analyst Zhao Qinghe said more market demand and more production led to the rebound in manufacturing and services.

“The market conditions are stabilizing, and we may expect a good start for 2016,” Zhao said.

The PMI’s component indexes showed new orders rose to 50.2 in December, up 0.4 points from a month earlier, while production increased from 51.9 to 52.2.

The set of activity data for November released earlier showed signs of improvement in China’s economy as well, with industrial production and retail sales growth accelerating, while fixed-asset investment maintained its upward momentum.

In particular, industrial production rose 6.2 percent, strengthening to its quickest rate since June.

Also, profits at China’s industrial companies declined at a slower pace in November, indicating stabilization in the sector. The net earnings of manufacturers totaled 672 billion yuan (US$103 billion), down 1.4 percent from a year earlier. The rate improved from a decrease of 4.6 percent in October and September’s 4.5 percent cut.

Other December figures have yet to be announced.

China may still need easier policies to sustain the growth, said Liu Ligang, an economist at Australia & New Zealand Banking Group Ltd.

“With soft growth momentum and deflationary pressures growing, we expect the government to further ease its monetary policy and continue to implement an expansionary fiscal policy,” Liu said.

China’s gross domestic product rose 6.9 percent in the first three quarters of 2015, with the third-quarter rate of 6.9 percent the slowest since 2009.

China may lower the target for this year’s economic growth to 6.5 percent from around 7 percent in 2015, economists predicted after the conclusion of the annual Central Economic Work Conference in December, while the World Economic Outlook that was released recently by the Shanghai Academy of Social Sciences said China’s economic growth could ease to 6.78 percent this year.