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Fast Comment ChinaStrong sign of stimulus kicking in

  1. Both PMIs jumped in a rare synchronised jump
  2. Growth should rebound in Q2
  3. Structural weakening to continue
Both PMIs jumped in a rare synchronised jump
Both Chinese manufacturing PMIs surprised strongly on the upside in a rare synchronised jump. Manufacturing PMI from Markit/Caixin leaped from 49.9 in February to 50.8 in March. The official manufacturing PMI jumped from 49.2 to 50.5, the biggest increase since 2012. Both sub-indices for new export orders (most notably the official one) increased, easing global growth fears somewhat.
Growth should rebound in Q2
Following distortions from the Chinese new year in recent months and the general challenges with the quality of Chinese economic data, we see the March PMI outcome as a rather clear sign of a stimulus-induced rebound in economic growth. This growth rebound should become visible in the hard indicators over the coming couple of months.
Structural weakening to continue
Once the growth rebound is confirmed, attention will likely soon turn to whether the stimulus will continue or whether the authorities this time will be more hesitant to ease to avoid refuelling the credit bubble. We subscribe to the latter view and see growth slowing gradually again late this year.


Bjarke Roed-Frederiksen

Senior Economist

Latin America and China

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