The purchasing managers’ index for the manufacturing sector published by the China Federation of Logistics & Purchasing (CFLP) inched up in June from 53.1 to 53.2 points. It has now been above the 50-point expansion threshold for four months in a row. Together with other economic data such as industrial production (up 8.9% on a year earlier in May), the latest survey of purchasing managers underpins our view that the Chinese economy is now clearly over the worst. In the second quarter the economy is already likely to have picked up steam again. We have penciled in an increase of 6.5% on a year earlier.

However, all told, we are not expecting a strong upswing, with the momentum of export demand not yet likely to be sufficient in the months ahead. It is also unlikely that the credit-driven growth in domestic demand (stimulus package!) will last all that long. May saw the strongest growth in lending since 1998 (+28% on a year earlier). For 2009 as a whole we expect to see real economic growth of between 6.5 and 7%.

 

Gregor Eder

tel.: 49 / 69 / 2 63 – 5 33 58

e-mail: gregor.eder@allianz.com