China’s economy on the upswing; world markets climb – by Carolynne Wheeler (Globe and Mail – December 3, 2012)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

BEIJING — Amid European gloom and the looming U.S. fiscal cliff, the Chinese economy appears to be regaining its momentum.

Two separate purchasing managers’ indices ticked up last month: an official state measure released over the weekend reached 50.6, a seven-month high, while a separate tally by HSBC hit a 13-month high, at 50.5.

It’s not often that the two numbers so closely intersect, since one is more heavily weighted toward state-owned enterprises and the other toward the smaller private sector, and suggests the economic winds are changing for China despite external forces.

World stock markets rose Monday on the data. European stocks opened higher. Britain’s FTSE 100 rose 0.4 per cent to 5,892.73. Germany’s DAX added 0.5 per cent to 7,440.67 and France’s CAC-40 advanced 0.5 per cent to 3,575.95.

Wall Street appeared headed for a session of modest gains, with Dow Jones industrial futures rising 0.1 per cent to 13,025 and S&P 500 futures adding 0.1 per cent to 1,416.

“The final November manufacturing PMI stood at a 13-month high of 50.5 on increasing new business and expanding production. This confirms that Chinese economy continues to recover gradually. We expect GDP growth to rebound modestly to around 8 per cent in 4Q as the easing measures continue to filter through,” said Qu Hongbin, chief China economist and co-head of Asian economic research at HSBC, in a release accompanying the number.

The HSBC PMI measure was up from 49.5 in October, on an index where above 50 is considered expansion. New orders, new export orders and purchasing activity were all up, while backlogs of work and inventory fell.

The numbers do come with one caveat, in that the recovery is largely driven by government investment and the activity of state-owned enterprises, suggesting that there will yet be a longer-term cost for an economy still in need of wide-ranging reform.

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