Chinese factory activity returns to growth in September amid AI boom
China's factory activity rebounded in September, returning to growth after two months of decline, according to an official survey released on Wednesday. The National Bureau of Statistics reported a manufacturing purchasing managers' index (PMI) of 50.1, up from 49.8 in August. This figure marked the end of a two-month contraction and aligned with the median forecast of 50.1 in a Reuters poll.
The PMI, which separates expansion from contraction at the 50-point mark, is seen as a critical indicator of China's industrial sector health. The sub-index for new orders stood at 50.5, while the sub-index for production reached 51.7. These results are broadly consistent with a private survey by RatingDog, which recorded the manufacturing PMI at 52.1 for September.
The government's push for cheaper credit across various sectors, including infrastructure and technology, along with expanded support for home buyers, aims to bolster the economy's fragile areas following a series of weak economic readings. Retail sales and investment have remained low, prompting policymakers to seek additional measures to revive growth.
Lynn Song, ING's chief economist for Greater China, noted that these new support measures could help stabilize the economy's weaker sectors. Despite China's heavy reliance on exports and industrial production to sustain growth, the country's global trade surplus is projected to surpass $1 trillion for a second consecutive year. However, geopolitical uncertainties and escalating trade tensions pose potential risks to the export outlook, as Chinese goods face increased scrutiny in overseas markets.
On Monday, China and the United States announced plans to pursue tariff cuts on $60 billion worth of goods traded between them, ranging from US corn to cosmetics and Chinese toys to household appliances. Nevertheless, both sides maintained differences, with the United States excluding non-seed soybeans, the most significant US agricultural export to China.
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