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People's Daily Online>>Opinion

Will China's economy keep growing or slow down?

By Ye Tan (Jiefang Daily)

08:05, March 07, 2012

Edited and translated by People's Daily Online

China's Purchasing Managers' Index (PMI) rose 0.5 percentage points from the previous month to 51 percent in February, which boosts Chinese people’s confidence in the country's economy, according to statistics from the China Federation of Logistics and Purchasing (CFLP).

The country's PMI has been slightly over the critical point of 50 percent that demarcates expansion and contraction for three consecutive months. The PMI reading of 51 percent shows a slow expansion, lower than the historical average of 52.7 percent, which suggests that the foundation for the recovery of the country’s manufacturing economy is not solid enough. However, there is also good news. The five major PMI sub-indices, including the sub-indices of production, new orders, employment, and supplier deliveries, all rose, except the sub-index of raw material inventory.

Statistics from the CFLP show that major manufacturers are recovering due to an improved investment environment and loosened monetary policy.

Industries that are growing include traffic and transportation equipment manufacturing industry, general-purpose equipment manufacturing industry, electrical machine and equipment manufacturing industry, special equipment, instrument and meter manufacturing industry, communication equipment, computer and electronic equipment manufacturing industry as well as medicine production industry. However, situations of iron ore, cooper industry, shipping and oil industries are not optimistic. Except for the equipment manufacturing, situations of other raw materials and manufacturing industries are also not good. Therefore, the financial strain of China's large enterprises has eased. In the inter-bank lending market of Shanghai, both the short-term and long-term interest rates are at low levels and the measure of reducing deposit-reserve ratio has taken effect very quickly.

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