China's enterprise production continues to recover

China non-manufacturing purchasing managers' index (PMI) and the comprehensive PMI remained above the expansion territory in May, indicating that China's overall economic output continued to expand while enterprise production and business activities have maintained the recovery momentum, according to data released by the National Bureau of Statistics (NBS) on Friday.

The non-manufacturing PMI stood at 51.1, remaining flat month-on-month as the sector continued to expand. The comprehensive PMI stood at 51.0, down 0.7 points while still remaining above the expansion territory, indicating that China's enterprise production and business activities have maintained momentum of recovery and development, Zhao Qinghe, an NBS statistician, said in a notice on Friday.

A reading above 50 indicates expansion, while one below reflects contraction.

Major improvement has been seen in investment, consumption and trade amid the country’s economic revival, and the momentum is expected to sustain, Li Chang’an，a professor at the Academy of China Open Economy Studies of the University of International Business and Economics, told the Global Times on Friday.

China’s economic development has maintained a solid recovery in 2024, with major indicators showcasing an upward trajectory. The International Monetary Fund on Wednesday raised China’s GDP growth forecast for 2024 to 5 percent, up 0.4 percentage points from its World Economic Outlook report released in April, further adding to a growing number of optimistic signs that the Chinese economy remains on a solid recovery track.

However, China’s manufacturing PMI in May came in at 49.5, down 0.9 points from the previous month, which was affected by a relatively high base and lack of effective demand, Zhao said.

The May Day holidays affected China’s manufacturing activities while the readings also reflected a relatively weak domestic demand compared with the supply side, Zhou Maohua, an economist at China Everbright Bank, told the Global Times on Friday.

Despite the drop, the domestic manufacturing enterprises keep a stable expectation for the market development as the index of production and business activity expectation stood at 54.3 in May and has always remained at 54.0 and above since this year, according to the notice.

As the country has been optimizing and upgrading its manufacturing sector amid the rapid development of emerging industries and new quality productive forces, experts expect the manufacturing sector to further pick up as more targeted policies will take effect.

China has been ramping up support for the manufacturing sector especially for the advanced manufacturing sector, Li said, adding that more policy support from the monetary and tax fields will help further bolster the sector’s development.

In 2024, responsible authorities have put forward a series of new policies, including increasing support for scientific and technological innovation in the manufacturing industry, promoting the deep integration of the manufacturing industry with the service industry, and optimizing the environment for the development of the manufacturing industry.

The latest move came as China’s State Council on Wednesday unveiled a detailed action plan to cut carbon emissions in 2024 and 2025, with major goals in cutting fossil fuel consumption, increasing the use of clean energy and upgrading steel and other industries.

In terms of the macro policies, Zhou said that the macro policies will majorly focus on promoting the consumption and domestic demand while supporting the supply end. Zhou said that fostering the implementation of targeted policies concerning large-scale equipment renewal and trading-in of consumer goods will help promote a virtuous cycle of demand and production.