China's manufacturing industry returned to growth for the first time

China's PMI increased slightly in March, marking the first growth in the manufacturing industry in 6 months.

Data on March 31 showed that China's purchasing managers index (PMI) in March reached 50.8 points, up from 49.1 last month. This was higher than the average forecast of 49.9 in a previous Reuters poll .

The growth rate is still modest but this is also the highest PMI index since March last year, thanks to tough restrictions related to Covid-19 starting to slow down.

This result also brings an optimistic signal to policymakers even when the real estate crisis is still a drag on the economy as well as people's confidence.

Zhou Maohua, an expert at China Everbright Bank, said the index showed that domestic supply and demand had improved, home and business owner confidence was recovering, and consumer and investment willingness was increasing. is increasing.

March PMI indicated that China's new export orders increased to a positive level, breaking a decline lasting more than 11 months. However, employment continues to decline, albeit at a slow pace.

Recent optimistic indicators show that the world's second largest economy is returning to a better state. Therefore, many analysts began to adjust and raise China's growth forecast this year.

For example, Citi Bank, on March 28, raised its economic growth forecast for China in 2024 to 5% from 4.6%, citing "recent positive data and the introduction of suitable books".

Consulting firm China Beige Book said last week that March data showed that the Chinese economy was ready for a strong first quarter of growth. The labor market has recorded its longest period of improvement since the end of 2020. Meanwhile, manufacturing as well as retail sales both grew.

However, the real estate crisis is still a major obstacle to the Chinese economy. In addition, the country also faces rising local government debt and weakening global demand.

Previously, on March 5, Prime Minister Ly Cuong announced this year's economic growth target of 5%. However, analysts say policymakers will need to roll out more stimulus measures to achieve the target.

On March 1, the Chinese government approved a plan to promote consumer demand. This plan is expected to create market demand of more than 5,000 billion yuan (equivalent to 691.6 billion USD) per year.

Many analysts fear that China's economy could gradually fall into a Japanese-style stagnation by the end of the decade if planners do not take measures to reorient the economy towards consumption. households and allocate resources according to the market, while at the same time getting rid of too much dependence on infrastructure investment as before.