Key indexes notch up record highs for 2020 as economic recovery becomes more robust
China's economic rebound gained momentum last month as official purchasing managers indexes for the manufacturing and nonmanufacturing sectors both reached their highest level so far this year, the National Bureau of Statistics said on Monday.
This came as the recovery in demand has accelerated to catch up with supply, and Beijing is expected to roll out new measures soon to further boost domestic demand in pursuit of the dual-circulation development paradigm, experts said.
The PMI, a key barometer of the health of the nation's manufacturing sector, increased to 52.1 in November, the highest level so far this year and versus 51.4 a month earlier, indicating that the sector has increased its pace of expansion, the NBS said.
A reading above 50 indicates expansion, while one below that reflects contraction.
Nonmanufacturing PMI edged up to 56.4 in November, the best reading of the year and compared with 56.2 in October, as market demand in the services sector recovered while construction activity sped up, the bureau reported.
Officials and experts said the latest PMI figures augur well for future economic prospects, as they offer fresh evidence that the unbalanced recovery in supply and demand is being addressed, which will help China's economic rebound become more robust and less policy-driven.
The restoration of production in China has outpaced that of demand ever since the COVID-19 pandemic started. But as of November, the difference between the sub-gauges for production and new market orders has shrunk for five consecutive months to 0.8 percentage point, according to the NBS.
"The narrowing difference indicated that the internal (growth) impetus of the manufacturing sector has continuously risen and the circulation between supply and demand has improved," said Zhao Qinghe, a senior NBS statistician.
Wu Chaoming, chief economist with Chasing Securities, said domestic demand related to consumption and infrastructure recovered last month while the Singles Day shopping festival has driven up new orders for manufacturers.
Wu cited the robust recovery in exports as another key factor buoying the manufacturing sector, with the sub-gauge for new export orders having risen for seven consecutive months to 51.5 in November.
The acceleration of the rebound in domestic demand may continue into the first quarter of 2021, as corporate earnings recover while household incomes increase, said a report from the China Macroeconomy Forum, backed by Renmin University of China.
However, aggregate demand has remained weak despite these improvements, the report said.
The nation should roll out reform measures and macro policies next year to boost domestic demand, including those to lift personal incomes, as part of efforts to build the new development paradigm, it said.
Monetary policy
China will nurture a strong domestic market and establish a new development paradigm, in which internal economic circulation is the mainstay while the domestic and external markets can support each other, according to the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China.
Experts said China will maintain a structurally accommodative monetary policy to sustain the economic recovery, which avoids excessive easing or sudden tightening.
"The economy has not recovered to an overheated or utterly healthy condition. Overall, monetary policy is expected to remain supportive for the economy," said Zhou Hao, senior emerging markets economist at Commerzbank, a German lender.
The NBS said the recovery of the manufacturing sector remained "unbalanced", as the textile and clothing sector remained in contraction territory last month, while some exporters reported that a stronger yuan had dampened export orders.
The bureau also reported the fast expansion of the financial sector last month with a PMI reading of more than 60, amid the sector's stepped-up efforts to back the economy.
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