HONG KONG (AP) — A new government survey released Tuesday shows China’s manufacturing sector gained momentum in June, powered by strong overseas demand for artificial intelligence hardware.
The official manufacturing purchasing managers index, known as PMI, rose to 50.3 in June, up from 50.0 in May, surpassing what economists had predicted, according to the National Bureau of Statistics. On a scale of 0 to 100, any reading above 50 signals growth, while a number below 50 points to a slowdown.
Key components of the report also showed improvement. The sub-index tracking new orders jumped to 51.2 in June from 49.9 in May, while the production sub-index edged higher to 51.4 from 51.2.
Julian Evans-Pritchard, head of China economics at Capital Economics, noted in a Tuesday analysis that while conditions have improved, the recovery is narrow. “China’s economy has regained some momentum lately. But this remains heavily dependent on exports and AI-related tech,” he wrote. “External demand remains the main engine of growth for China’s manufacturing sector.”
Huo Lihui, a chief statistician at the National Bureau of Statistics, said in an official statement that the June figures indicated China’s economic environment was improving.
Still, some economists sounded a note of caution. Chinese consumers have stayed cautious in their spending following years of trouble in the country’s real estate market, leaving domestic demand weak.
Lynn Song, chief economist for Greater China at ING Bank, said additional government policy measures aimed at encouraging spending and investment inside China would be helpful, and could prevent the country’s growth from becoming increasingly one-sided.
China’s leadership has set a national economic growth target of between 4.5% and 5% for the year. Many economists believe the country is on track to hit that goal, largely thanks to the surge in AI-related exports.
