News & Reports News Year 2013 January 2013 Year-end boost for China'smanufacturing activities

Year-end boost for China'smanufacturing activities

CHINA'S manufacturing grew at its fastest pace in 19 months in December, with both industrial output and purchasing activities reaching a record high in about seven quarters.

The HSBC Purchasing Managers' Index, a monthly measure of manufacturing activities weighted in favor of private and export-oriented companies, rose to 51.5 in December, from 50.5 in November and compared to a preliminary reading of 50.9, HSBC Holdings Plc and research firm Markit said yesterday.

A reading above 50 indicates expansion.

"December's final manufacturing PMI picked up for the fourth consecutive month to a 19-month high, thanks to the faster new business flows and the end of destocking," Qu Hongbin, HSBC's chief economist for China, said.

"Such a momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilize."

Output at manufacturing plants expanded for the second month in a row and climbed to its highest level in 21 months. Meanwhile, purchasing activity rose at its fastest pace since March.

The official PMI compiled by the National Bureau of Statistics, which is slanted more toward state-owned enterprises, is due to be published today.

November's reading of the official PMI was 50.6 and December's is expected to be higher, UBS Securities said.

Despite ongoing external pressure, the growing PMI plus the government's pro-growth policy into the new year will support a modest recovery of economic growth of around 8.6 percent in 2013, Qu said.

The government is expected to announce the official growth target at the annual session of the National People's Congress in March.

Zhang Xiaoqiang, vice director of the National Development and Reform Commission, told a forum in Beijing at the weekend that the economy was likely to expand around 7.5 percent with consumer inflation up 3.5 percent in 2013 due to tough export challenges amid sluggish demand.

Yang Kaisheng, president of the Industrial and Commercial Bank of China, told the forum that credit supply would expand at a faster rate in 2013 to support growth above 7.5 percent.

At a forum in Shanghai last week, Li Yang, vice president of the Chinese Academy of Social Sciences, said China's policy-makers had reached a consensus on the official target for 2013 set against the backdrop of putting people's interests foremost.

The capital pool would be more slanted toward private companies responsible for more than 80 percent of employment in China, Li said.To further ease the crunch, China will encourage more industrial and commercial enterprises to invest in agriculture, Han said.

Bi Meijia, chief economist with the Ministry of Agriculture, said more efforts are still needed to boost farmers' income, which have been dragged down by the rising production costs and increasing impact from the international markets.

Bi advised the government to improve the agricultural protection system and expand the coverage of subsidies to benefit more farmers.

Meanwhile, Minister of Finance Xie Xuren also pledged to deepen efforts to boost farmers' income by allocating targeted funds to stabilize grain prices and boosting capital management for agricultural use at a national finance work meeting that closed on Friday.

In 2013, the agriculture ministry will expand the pilot program of the registration of farmers' land contract management rights to more regions