China manufacturing returns to growth as stimulus boosts economy

In September, China's factory activity returned to growth, according to official data released on Wednesday, marking a positive trend after two months of contraction. The stimulus package announced by Beijing aimed to counteract economic difficulties and reduced consumer spending in the world's second-largest economy. The manufacturing purchasing managers' index (PMI), a key indicator of industrial health, registered at 50.1 in September, slightly above the critical 50 threshold that signifies expansion.

This figure, provided by the National Bureau of Statistics, matched projections in a Bloomberg survey of economists and represented an improvement from the previous months' readings of 49.8 and 49.2 in July and August.

Huo Lihui, a statistician at the National Bureau of Statistics, stated in a statement that the data indicated a recovery in economic conditions. She noted that three key industries—equipment manufacturing, high-tech manufacturing, and consumer goods—were experiencing rapid expansion. The robust production and operations in these sectors were highlighted by Huo.

The non-manufacturing PMI, which measures activity in sectors such as services and construction, stood at 50.2, surpassing a Bloomberg forecast of 49.2 and an increase from the previous month's 49.0. Huo added that the construction industry's business activity index reached its highest level for the year.

Beijing is striving to sustain economic momentum despite challenges such as trade tensions with Washington and a long-standing property-sector crisis that has alarmed consumers. On Monday, the Chinese leadership unveiled a "package of pragmatic and effective incremental policy measures" to bolster the economy. The following day, the People's Bank of China introduced measures to lower credit costs in key sectors like infrastructure and technology, and to provide additional subsidies to homebuyers.

The central bank also announced plans to extend loans to support investment in water, power-grid, computing, communications, urban pipeline, and logistics networks. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, cautioned that while the stimulus policies mark "another step in the right direction," they may not be sufficient to stabilize the economy independently.