Growth in factory activity driven by China’s high-tech output

China’s Factory Activity Expands for Second Consecutive Month

China’s factory activity has expanded for a second consecutive month, driven by a rise in high-tech manufacturing output as the government seeks new drivers to support its struggling economy.

In April, the purchasing managers’ index stood at 50.4, slightly above analysts’ expectations but lower than the previous month’s figure of 50.8. The National Bureau of Statistics reported that equipment manufacturing and high-tech manufacturing PMIs were 51.3 and 53.0, respectively, indicating expansion in these sectors.

Despite deflationary pressures and weak external demand, China’s factory activity continues to recover. Industrial profits data released in March showed a 3.5% year-on-year decline, raising concerns about the economy’s momentum.

President Xi Jinping’s focus on “new quality productive forces” has led to significant growth in high-tech industries, including electric vehicles and green energy. However, the US and Europe have expressed concerns about Chinese overcapacity in manufacturing, fearing the impact on export markets.

As Xi prepares to meet European leaders, tensions over trade and subsidies are high. The EU has initiated investigations into Chinese goods and producers, adding to the economic uncertainty.

With an economic growth target of 5% for the year, China faces challenges in sustaining its recovery. While first-quarter GDP data was promising, analysts are cautious about the impact of adverse weather on construction and steel demand in the coming months.

Despite these challenges, China’s focus on high-tech manufacturing and new growth drivers signals a shift towards a more sustainable and innovative economy.