China's manufacturing expanded at the fastest pace in six months in October, adding to signs that economic growth is withstanding government efforts to curb property speculation and improve energy efficiency.
The Purchasing Managers' Index rose to 54.7, the logistics federation said yesterday.
Premier Wen Jiabao aims to restrain inflation andlimit the risk of asset bubbles without destroying the momentum of the economy that's leading the global recovery. China may see growth of 10 per cent this year even after raising interest rates last month and resuming gains in the yuan from June, analysts say.
"The economy has stabilised although growth is set to decelerate further in coming quarters," said Ren Xianfang, a Beijing-based economist. "This will be a smooth descent, rather than a falling-off-a-cliff experience."
A reading above 50 indicates an expansion. The gain reported yesterday was after London-based Capital Economics said September's PMI was probably boosted by a pattern of strong readings for that month each year, suggesting a lack of adequate seasonal adjustment of the data.
An energy-efficiency drive in industry, a crackdown on real-estate speculation and rising year-earlier bases for comparison will pare back economic growth, said Ren.
Inflows of foreign money are complicating management of the economy after a record expansion in credit last year that added to asset-bubble risks. The Shanghai Composite Index gained 12 per cent last month, the best performer among global markets.
