China’s economic activity, spanning both the manufacturing and services sectors, expanded for the second consecutive month in February, providing the latest glimpse into the country’s robust growth momentum amid signs of recovery. Analysts and officials cited the widespread improvement in both sectors as evidence of the gradual normalization of activities and the accelerated resumption of work and production, as China continues to shake off the impact of COVID-19 and sets its sights on a steady recovery despite global headwinds.
According to data from the National Bureau of Statistics, the purchasing managers index for China’s manufacturing sector, which measures activity at factories, surged to 52.6 in February from 50.1 in January. The nonmanufacturing PMI, which tracks activity in the services and construction sectors, rose to 56.3 in February from 54.4 in January. These figures reflect a solid recovery trend in terms of improving demand and supply, suggesting that China’s growth momentum is gaining pace.
Nomura expects both manufacturing and nonmanufacturing PMIs to remain elevated this month, as the post-COVID recovery continues. It predicts that China will set its 2023 GDP growth target at “around 5.5 percent” during the upcoming two sessions, which is the same as last year and close to its forecast for 2023 GDP growth of 5.3 percent.
Caixin China General Manufacturing PMI, which focuses on small and medium-sized enterprises and exporters, also showed a strong pickup to 51.6 in February from 49.2 in January. The gauge crossed the 50-point mark for the first time in seven months, logging a new high since June. Manufacturers’ expectations for future output reached a level not seen since March 2021, expressing strong confidence in a post-pandemic economic recovery.
While optimism is on the rise, Wang Zhe, senior economist at Caixin Insight Group, warned that the foundation for economic recovery is not yet solid and that it will take time to fully restore production and social order to normal. Jin Zhuanglong, minister of industry and information technology, pledged that the country would take solid steps to promote the high-quality development of SMEs, including optimizing the business environment and further implementing policies on easing the burden on the nation’s small and medium-sized firms. The country aims to cultivate over 80,000 specialized and sophisticated SMEs and around 100 SME industrial clusters with local features in 2023, and is preparing to introduce a guideline on further improving the service system for small and medium-sized firms.