China factory activity rises at fastest pace in eight months

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HONG KONG, May 31, 2018 (BSS/AFP) – Activity in China’s factories expanded
at its fastest pace for eight months in May, official data showed Thursday,
as demand at home and overseas improved despite brewing trade tensions with
the United States.

The purchasing managers index came in at 51.9, up from 51.4 last month,
the National Bureau of Statistics (NBS) said, in line with a Bloomberg News
survey.

The reading, the first monthly economic indicator to gauge the world’s
second largest economy, was well above the 50-point mark that separates
expansion from contraction.

NBS analyst Zhao Qinghe said in a statement that high-tech manufacturing
and improved export orders both contributed to the growth.

The May reading marks the fastest rate of expansion since September
despite US President Donald Trump’s threats to impose tariffs on China, and
Beijing’s vows to hit back.

The rise in new export orders “is perhaps due to frontloading by importers
in fear of a possible trade war”, Nomura chief China economist Lu Ting said
in a research note.

Capital Economics China economist Julian Evans-Pritchard warned that the
growth may not be sustainable.

“It appears to mostly reflect a temporary boost to industrial output from
the easing of pollution controls rather than a turnaround in underlying
demand,” he said.

China curbed activity in heavy industries in the country’s northeast
during winter months in an effort to reduce surplus capacity and lessen the
heavy smog that typically blankets the region.

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