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Factory activity in China rose for a second straight month, led by rising high-tech manufacturing output, as the government looks for new drivers to shore up the flagging economy.
The purchasing managers’ index stood at 50.4 in April, slightly above analyst expectations of 50.3 in a Bloomberg survey, but below 50.8 in March, according to official statistics.
The National Bureau of Statistics said the PMIs for equipment manufacturing and high-tech manufacturing were 51.3 and 53.0, respectively. Although these were below the previous month, “they remained in expansion territory and were both above the overall manufacturing sector.”
“High-end manufacturing has evolved rapidly,” the NBS said. Any value above 50 indicates an increase in activity.
The figures show that factory activity in China continues to recover despite deflationary pressures and weak external demand.
Industrial profits data released on Saturday showed a 3.5 percent year-on-year decline in March, “casting further doubt on the economy’s momentum,” foreign exchange group Ebury said in a report ahead of the PMI release.
The strong growth in high-tech industries comes as President Xi Jinping emphasizes “new quality productive forces” that include sectors such as electric vehicles, green energy and other areas of advanced manufacturing.
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The U.S. and Europe fear Chinese politicians are pushing excess manufacturing capacity to boost growth, which they say raises the risk of dumping in export markets.
Beijing has dismissed Western warnings about overcapacity as protectionism, while state media said it was part of a U.S. conspiracy to curb China’s development.
Xi will begin a trip next week to meet European leaders, including French President Emmanuel Macron. The EU has launched a series of anti-subsidy and other investigations into Chinese goods and manufacturers in recent months.
Beijing has set a 5 percent economic growth target for this year and a meeting of the Communist Party’s Politburo this week is expected to examine the state of the economic recovery.
After strong first-quarter gross domestic product data that showed the economy is on track to meet China’s annual growth target, few expect the meeting to result in robust stimulus measures.
Goldman Sachs said ahead of the PMI data release that “high-frequency indicators such as steel demand showed subdued growth in April,” adding that it expects a contraction in construction this month due to poor weather in southern China.
The non-manufacturing PMI, which includes construction and services, came in at 51.2, below analysts’ median forecast of 52.3 and below March’s reading of 53.