The growing positive signs have significantly improved expectations for the economic outlook in 2024 despite some external and internal challenges. With such strong momentum and a huge package of supportive policies, the world’s second-largest economy will likely exceed the growth target of about 5 percent this year, economists said.
The Caixin manufacturing purchasing managers’ index (PMI) reached 51.1 in March, 0.2 points higher than that in February and the highest level since March 2023, indicating that China’s manufacturing activity expanded for a fifth straight month at an accelerating pace, Caixin said in a report on Monday.
The Caixin PMI reading also beat market forecasts of 51 in March, according to Reuters. A PMI reading of above 50 indicates expansion, while one below points to contraction.
The survey on Monday came after China’s official manufacturing PMI data on Sunday also painted a rosy picture for factory activity in March. The official manufacturing PMI stood at 50.8, returning to expansion territory for the first time since September 2023.
“The data for the first quarter basically indicate a strong start for China’s economy this year, which could indeed build confidence and dispel some negative views about China’s economy,” Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Monday, noting strong indicators in trade and consumption.
The Caixin report showed that both manufacturers’ production and new orders expanded in March, with the sub-index for production hitting the highest level in 10 months. Also notably, the sub-index for new export orders hit the highest level since March 2023 and remained in expansion territory for a third consecutive month, according to the report.
“The sub-index for new export orders showed a stronger recovery momentum than the same period last year, this is very important,” Tian Yun, a Beijing-based economist, told the Global Times on Monday, noting that if exports continue this trajectory in the coming months, it will offer a huge boost for the economy.
Exports remain a major growth driver for the Chinese economy, but exports have been under tremendous pressure due to weakening external demand. However, China’s exports have also been improving remarkably this year. In the first two months of 2024, exports jumped by 10.3 percent, compared with growth of 6.7 percent in imports.
The rebound in trade could also help lift domestic investment and consumption, according to Tian. “Based on our optimistic expectations, China’s economic growth could even reach 5.3 percent or 5.4 percent. If this is the trend, then the West’s claims about the Chinese economy such as ‘Peak China’ will be self-defeating,” Tian said.
Another source of confidence in China’s growth prospects this year is the country’s strong policy support for economic development. The country has taken a slew of measures to boost various aspects of the economy, including boosting investment and consumption, and China still has plenty of policy tools at its disposal to further boost growth, economists said.
“We still have plenty of tools in our policy toolbox, which means there is still a lot of room for policy,” Cong said, noting that further policy support is expected to boost high-quality development, innovation and industrial upgrading, and deepen reform and opening-up.
“Judging from these policy trends, the outlook for economic growth for the rest of the year is very promising,” he said.
