China's manufacturing activity rose to the highest level in more than two years in July, two separate business surveys showed Friday, adding to fresh signs that the country's economic recovery is on track following a series of stimulus measures by the government.
The official manufacturing Purchasing Managers Index (PMI) climbed to 51.7 on a 100-point scale last month, the highest level in 27 months after June's 51.0, the National Bureau of Statistics and the China Federation of Logistics and Purchasing said.
A PMI reading above 50 indicates expansion in manufacturing activity, while a figure below 50 represents contraction. The index, which is a closely watched barometer of the health of the Chinese economy, marked the highest since April 2012 and grew for the fifth consecutive month.
British bank HSBC Ltd., separately said its own final PMI for July was revised down to 51.7 from its preliminary reading of 52.0 released last week, but was still above the 50-point level and up from June's final reading of 50.7.
"The economy is improving sequentially and registered across the board improvement compared to June," HSBC economist Hongbin Qu said in a statement. "Policymakers are continuing with targeted easing in recent weeks and we expect the cumulative impact of these measures to filter through in the next few months and help consolidate the recovery," he added. Friday's data came after China's economy grew 7.5 percent year-on-year in the second quarter of this year, slightly higher than the 7.4 percent expansion in the first quarter.
Meanwhile, Zhao Qinghe, a senior National Bureau of Statistics statistician, attributed the strength to government growth-stabilizing policies and the improving external environment, which helped boost production and new orders, according to the state-run Xinhua News Agency.
After a shaky start this year, Chinese policymakers have pinned hopes on accelerating investment on railways and infrastructure, quickening fiscal spending, and selectively easing monetary policies to support faltering growth. In the first six months, total national fiscal spending expanded 15.8 percent from a year ago to CNY 6.92 trillion (USD 1.12 trillion).
Along with the proactive fiscal policy, more focus has been put on optimizing credit structure by giving more financing support to small business against the backdrop of prudent monetary policy and reasonable credit growth. Looking into the latter half of the year, Chinese authorities have signaled that they will continue to rely on targeted macro policies to ensure economic growth stays within a proper range, Xinhua added.