China's manufacturing economy staged a moderate rebound in August after slowing for several months under the onslaught of government measures to rein in credit and deter property speculation.
Despite encouraging signs of stabilisation in a pair of business surveys released today, analysts cautioned that the robust domestic economy would have to battle the headwinds of soft external demand, especially from the United States.
"This reconfirms our long-held view that China is moderating rather than melting down," said Qu Hongbin, chief economist for China at HSBC.
He was commenting on a rise in the bank's purchasing managers' index (PMI) to a three-month high of 51.9 in August from 49.4 in July.
A PMI produced by the China Federation of Logistics and Purchasing (CFLP) also rose, to 51.7 from 51.2.
A figure above 50 denotes expansion; a reading below 50 indicates that business has contracted from the month before.
Both gauges had been trending lower - since January in the case of HSBC's and since April for the CLFP's. This had fanned concern that Beijing was overdoing its tightening and throttling an economy that has become a major driver of global growth.
Both surveys showed a decline in the stocks of finished goods even as orders improved, an indication that manufacturers will have to ramp up production to meet demand.
According to HSBC's survey, new export orders fell outright in August for the third month in a row.
Reuters