China PMI rise points to nascent upswing

A rise in China's key PMI economic indicator suggests that manufacturing activity in the world's second largest economy is picking up. The reading for November is fueling hopes that the global downturn has bottomed out. China's preliminary purchasing managers index (PMI) for November came in at 50.4 points, marking the first time in 13 months that the key indicator edged past the 50-point threshold, which separates economic growth from contraction. In October, the PMI reading for the world's second largest economy was 49.5 points, according to the release note published Wednesday by HSBC bank which commissioned the survey from British research group Markit. "This confirms that the economic recovery continues to gain momentum toward the year end," said HSBC's chief economist for China, Qu Hongbin, in the bank's release. But Qu also noted that the recovery in China was still in its early stage and that global economic growth remained fragile. In the third quarter, economic expansion in China slowed to a three-year low at a rate of 7.4 percent. But more recent data on exports, industrial output and investment point toward a rebounding economy, and has fuelled hopes that the worst is over. Zhu Haibin and Grace Ng, chief economists at US-based bank J.P. Morgan, attributed the PMI rise to Beijing's efforts to stimulate the economy with increased government spending. However, in a research note quoted by AFP news agency they warned of external factors that could negatively impact a Chinese recovery. The so-called fiscal cliff in the United States, which might bring automatic tax increases and spending cuts by the end of the year, as well as the simmering eurozone debt crisis, would remain key risk factors along China's road to recovery.