March PMI indicates growth remains a challenge

China's Purchasing Managers' Index, which grew to 50.3 in March from 50.2 in the previous month, offers a gleam of hope that the Chinese economy is slowly improving to avoid slipping below the annual growth target of 7.5 percent.

The official reading by the National Bureau of Statistics (NBS) shows that most of the sub-indexes are ticking up, a rare improvement in the past three months.

The new export sub-index, in particular, was strong at 50.1, 1.9 percentage points higher than in the previous month, indicating significant improvement in the performance of the export sector.

A reading above 50 indicates expansion of the manufacturing sector while it points to contraction if it falls below that mark.

However, despite the improved official March PMI, which mainly monitors large State-owned enterprises, the overall vitality of the economy remains questionable, as a number of indicators have sounded an alarm.

For example, the NBS statistics show that the fixed-asset investment growth fell to 17.9 percent, the lowest since Dec. 2002.

Based on PMI and other indicators, many economists predict that the year-on-year GDP growth could fall to below 7.5 percent in the first quarter.

The situation no doubt is very harsh. But a silver lining in the cloudy statistics is that the employment sub-index in the official PMI registered a positive growth to reach 48.3 in March, up from 48 in February.

Although it remains below 50, the rise in the reading shows the employment market remains resilient and, as the country's job-encouraging policies unfold, more jobs could hopefully be created in the coming months.

As the employment sector improves and inflation remains mild, policymakers still have some room to stick to its economic restructuring drive and avoid using large-scale stimulus to bolster growth.