Chinese survey shows manufacturing rebounding

[April 03, 2009]  BEIJING (AP) -- Chinese manufacturing expanded slightly in March following a painful months-long decline that wiped out millions of jobs as the global financial crisis battered exports, a business group said Friday.

The state-sanctioned China Federation of Logistics and Purchasing said its purchasing managers index, based on a survey of manufacturers, rose to 52.4 in March, up from February's 49. Numbers above 50 show an expansion in manufacturing.

"This month's manufacturing PMI index continued to maintain recovery momentum," the federation said in a statement.

The collapse in trade has forced thousands of Chinese factories to close and the government says at least 20 million people have been thrown out of work. Communist leaders worry about unrest if more jobs are lost.

President Hu Jintao said this week before the Group of 20 summit in London that problems with employment and other areas due to the crisis were "clearly increasing" despite Beijing's 4 trillion yuan ($586 billion) stimulus package.

Economists said the latest data point to a recovery but cautioned that China still depends on the United States and other export markets.

"Manufacturing may soon rebound in China," said Moody's Economy.com analyst Sherman Chan in a report.

However, "China's growth will not return to the pre-crisis pace without a global economic recovery," she said. "It remains a challenge for the government to reach its ambitious growth target of 8 percent for 2009."

The chance the index will fall back into contraction territory in coming months is "quite small," said Merrill Lynch economists Ting Lu and T.J. Bond in a report.

"Export growth is stabilizing and fiscal stimulus is gaining traction," they said.

The manufacturing component of the logistics federation's survey rose to 56.9 in March from February's 51.2, with new domestic orders at 54.6, up from 50.4. Trade shrank further, but its 47.5 reading was better than February's 43.4.

The federation did not say how many companies took part in the survey but has said in the past it covered more than 700 enterprises.

A similar survey released this week by Hong Kong brokerage CLSA Asia-Pacific Markets showed Chinese manufacturing still contracting in March for an eighth month.

Forecasts by private sector economists of China's growth this year range from 8 percent to as low as 5 percent -- the strongest of any major economy but a sharp drop from 2007's 13 percent expansion.

On Tuesday, the Asian Development Bank cut its 2009 growth forecast for China and other developing Asian economies to 3.4 percent from 5.6 percent. It said China should grow by 7 percent, down from last year's 9 percent.

On Wednesday, state media said Beijing will send a trade mission to the United States this month ahead of the first meeting of a high-level U.S.-Chinese economic forum since President Barrack Obama took office.

Hu and President Barack Obama agreed this week to renew a high-level dialogue on trade and economic issues and to raise its political level.

Beijing sent missions ahead of past rounds of the dialogue to buy U.S. jetliners and other goods in an effort to diffuse trade tensions. The news reports did not say what the latest mission would do and the Commerce Ministry declined to give more details.

In February, a 200-member delegation of Chinese businesspeople and officials visited Europe in what Beijing said was an effort to promote trade and combat protectionist sentiment amid the global slowdown. The government says the group signed contracts worth more than $13 billion in Britain, Germany, Switzerland and Spain.

A second group followed in March to look at investment opportunities in autos, textiles, chemicals, energy conservation and other industries.

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On the Net:

China Federation of Logistics and Purchasing (in Chinese): http://www.chinawuliu.com.cn/

[Associated Press; By JOE McDONALD]

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