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China's factory growth accelerates

·2-min read

China's manufacturing activity expanded at the fastest pace in three months in March as factories cranked up production after a brief lull during the Lunar New Year holidays.

Improving global demand added further momentum to a solid economic recovery.

The official manufacturing Purchasing Manager's Index (PMI) rose to 51.9 from 50.6 in February, data from the National Bureau of Statistics (NBS) showed on Wednesday, remaining above the 50-point mark that separates growth from contraction for the 13th straight month.

Analysts had expected it to rise to 51.0.

Chinese factory activity normally goes dormant during the Lunar New Year break but this year millions of workers stayed put due to COVID-19 fears, which led to an earlier-than-usual resumption of business.

Authorities successfully curbed the domestic transmission of COVID-19 during the winter, leading to quarantine restrictions and testing requirements being scaled back as life once again returns to normal.

The official PMI, which largely focuses on big and state-owned firms, showed the sub-index for production stood at the highest level since December. New orders also grew at their fastest in three months.

Adding to the positive impulse, export orders returned to growth amid improving foreign demand.

China managed to largely bring the COVID-19 pandemic under control much earlier than many countries as authorities imposed stringent anti-virus curbs and lockdowns at the initial phase of the outbreak.

That has helped its economy mount a rapid turnaround after a slump at the start of 2020, led by resurgent exports growth as factories raced to fill overseas orders.

Factory-gate prices have accelerated at their fastest pace in more than two years, while industrial output has also surged.

The resurgent COVID-19 infections abroad and logistics jams have seen some surveyed firms grappling with inadequate imports of few raw materials, leading to prolonged delivery timeframes, said Zhao Qinghe, at NBS in a statement accompanying the data.

Beijing has set an annual economic growth target at above 6 per cent this year, well below analyst expectations for an expansion of more than 8 per cent.

Premier Li Keqiang has said policies would not be dramatically loosened to chase higher growth, adding that the focus will be on consolidating recovery.

China's was the only major economy to post growth last year with an expansion of 2.3 per cent but that still marked the weakest annual pace in more than 40 years due to COVID-19.