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POLITICAL ECONOMY
Chinese underwhelmed by 'world's No. 1 economy' data
by Staff Writers
Beijing (AFP) May 01, 2014


China manufacturing up in April: government
Beijing (AFP) May 01, 2014 - China's manufacturing activity improved in April, the government said Thursday, showing increased strength for a second straight month as the country's broader economy slows.

The official purchasing managers index (PMI) was 50.4 in April, the National Bureau of Statistics said in a statement, up from 50.3 in March.

The index tracks manufacturing activity in China's factories and workshops and is a closely watched indicator of the health of the economy. A reading above 50 indicates growth.

The result matched the median forecast in a survey of 11 economists by Dow Jones Newswires.

A preliminary estimate published by British bank HSBC put China's PMI at 48.3 in April, better than 48.0 in March. HSBC is scheduled to release its final reading for April on Monday.

"The improvement of both PMIs reflects that a cyclical upturn is underway supported by the recent pro-growth targeted policies, and suggests that China's growth momentum is stabilising," ANZ Bank economists Liu Li-Gang and Zhou Hao said in a research note.

But Zhang Zhiwei, economist with Nomura International in Hong Kong, urged caution despite the improving PMI.

"We do not believe the economy has passed a turning point," he wrote in reaction to the result, adding that growth is set to slow to 7.1 percent in the second quarter.

"We expect the government to loosen fiscal and monetary policies in the next few months," he said.

Thursday's data, the first official reading on the world's second-largest economy in the current second quarter, came after China's economic growth for the first three months of 2014 came in at its weakest pace in 18 months.

Gross domestic product (GDP) grew 7.4 percent in the first quarter from the same period the year before, weaker than the 7.7 percent in the October-December period.

The result was the worst since a similar 7.4 percent expansion in the third quarter of 2012.

China's leadership says it wants to make private demand the key driver for the country's economic growth, moving away from over-reliance on huge and often wasteful investment projects that have girded decades of expansion.

Such a transformation is expected to result in growth that is slower but seen as stable and more sustainable in the long run.

China in March set its annual growth target for this year at about 7.5 percent, the same as last year. But officials, including Premier Li Keqiang, have been quick to stress that the target is flexible -- seen as a hint it may not be achieved.

China may be poised to overtake the United States as the world's top economy sooner than expected, according to one measure, but some underwhelmed Chinese would rather have clean air and political freedoms.

The World Bank on Wednesday published a vast study on the rankings of national wealth creation on the basis of 2011 figures.

It was carried out with several international organisations to compare national production figures in nominal terms, and also to reflect differences in buying power -- or purchasing power parity (PPP).

Gross domestic product (GDP) for the United States in 2011 amounted to $15.533 trillion, more than twice China's $7.321 trillion.

But after adjusting for PPP, the figure for China rose to $13.495 trillion -- which means that the rapidly growing Asian giant could overtake the United States as soon as this year.

Thursday was a public holiday in China so official reaction was not immediately available. Communist authorities have in the past played down such talk, keen instead to stress that in per capita terms, their people remain a long way behind the world's richest nations.

But there was scepticism, and cynicism, among Chinese social media users.

"They are talking about PPP, not GDP," wrote one of them on Sina Weibo, China's version of Twitter.

"As long as GDP, China is still far behind US," continued the post, which was written in English and was echoed by several others.

Some weibo users suggested they were more interested in tangible indicators directly related to their quality of life.

"Low income, cannot breath freely, no freedom, why should I care even if it's No. 1 in the Universe? Not to mention No. 1 on Earth," wrote a user.

"Is this more important than blue sky and clear water?" posted another.

China's decades-long economic boom has brought rising environmental problems, with large parts of the country repeatedly blanketed in thick smog and both waterways and land polluted.

One user suggested that such rankings were more closely watched overseas than in China.

"No domestic reports about this, only foreign media always talk about it," the post said.

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