Analysts quickly responded to the January lift in China’s purchasing managers’ index. The WSJ’s Real Time Economics blog said January’s PMI shows that the Chinese economy is bottoming out and the trend of a gradual recovery is taking shape.
Zhang Liqun, China Federation of Logistics & Purchasing, said, ‘In 2008 there were large fluctuations in the prices of domestic and foreign raw materials, resulting in a severe inventory adjustment and a sharp decline in industrial production. Since November 2008, the inventory adjustment has been largely completed, and the domestic prices of some raw materials, for instance iron and steel, have recovered.’
Sherman Chan, Moody’s Economy.com said, ‘Manufacturing in China is still contracting, but the bottom is now in sight. The massive fiscal stimulus announced late last year has not only helped to sustain business confidence, but has also given direct support to local manufacturers.’
Wensheng Peng of Barclays Capital, ‘Overall, we take this, together with the CLSA PMI released yesterday, as an early sign of a stabilization in manufacturing contraction.
‘Combined with the reports of a sharp acceleration in bank credit growth in January following a strong expansion in December, and signs of progress in the implementation of the fiscal stimulus, we expect final domestic demand will increasingly become an offsetting force to the weak external demand.’
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