China's manufacturing activity expanded in March for the first time in six months, Reuters reported on Sunday, citing an official factory survey. The Purchasing Managers' Index (PMI) rose to 50.8 from 49.1 in February, surpassing expectations and indicating growth. New export orders increased after an 11-month decline, but employment continued to decrease, albeit at a slower pace. Despite ongoing challenges in the property sector, recent positive indicators suggest a gradual recovery for the world's second-largest economy. Analysts have revised their growth forecasts upward for the year. However, the property sector's downturn remains a significant obstacle to growth, impacting local governments and state-owned banks. The official non-manufacturing PMI, which includes services and construction, also rose to 53 in March, the highest level since September. Premier Li Keqiang announced a growth target of around five per cent for 2024, but additional stimulus measures may be necessary to achieve this goal. Citi recently raised its economic growth forecast for China to 5.0 per cent for this year, citing positive data and policy initiatives. To address potential stagnation concerns, policymakers may need to shift the economy towards household consumption and market-driven resource allocation.
