China’s economy expanded at a faster rate in November, with manufacturing activity reaching multi-year highs and services growth showing no signs of relenting.
Beijing’s official manufacturing purchasing managers’ index (PMI) rose to 51.7 in November, following a reading of 51.2 the previous month. The November reading was the highest since mid-2014.
The official manufacturing PMI captures business trends at large and state-owned companies, contrasting with another closely followed report from Caixin that looks at small- and medium-sized enterprises (SMEs). Caixin’s manufacturing PMI will be released later in the day.
Meanwhile, the government’s official non-manufacturing gauge came in at 54.7 in November, up from 54.0 the prior month.
A PMI reading above 50 denotes expansion in economic activity. China’s manufacturing sector has been on the right side of growth in each of the last four months. Services output has expanded steadily since the financial crisis.
The world’s second-largest economy has surprised to the upside this year, growing at a steady 6.7% rate in each of the last three quarters. However, analysts warn that much of China’s newfound stability can be attributed to traditional growth industries tied to electricity use, rail cargo and bank loans. That contrasts with Beijing’s efforts to shift the economy toward service-oriented growth and consumption.
The so-called “smokestack” industries are expected to provide only a temporary boost to the Chinese economy as policymakers grow weary of ballooning debt. According to analysts, Beijing’s ability to develop a high-tech economy centered on consumption will be the key to long-term growth and prosperity. In the meantime, the country’s traditional growth drivers will provide a semblance of calm to a global marketplace struggling for momentum.