China factories set to avoid a hard landing

CHINA’S manufacturers have suggested that their sector is now solidly back to expansion, as purchasing managers indicate the best environment for business in the past six months.

HSBC’s purchasing managers’ index (PMI) for manufacturing in China reached 51.2 this month, up from 50.1 in August, with any number over 50 suggesting that the sector is in growth.

The figure is at its strongest level since before the spike in bank lending costs, which came in June. Most analysts now suggest that China is well on track to meet or beat the government’s target for 7.5 per cent growth in 2013, after concerns earlier in the year.

Output, new orders and backlogs of work all grew over the month.

Hongbin Qu, HSBC’s chief China economist, commented: “We expect a more sustained recovery as the further filtering through of fine-tuning measures should lift domestic demand. This will create more favourable conditions to push forward reforms, which should in turn boost mid and long-term growth outlooks.”

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