First quarter data an encouraging sign

Shanghai Securities News:

Even before the publication of first-quarter data by the National Bureau of Statistics, a series of positive signals, such as the rise in the official Purchase Managers' Index in the past eight months and a considerable increase in non-manufacturing PMI, suggested a better economic performance.

The PMI of 50.2 percent in the manufacturing sector in March was seen by many as a sign of China's economy gaining steam after bottoming out. Also, the 53.8 percent non-manufacturing PMI in March, an increase of 1.1 percentage points from February, indicated that its service sector had become more active.

In the short term, the stable economic recovery may lower the possibility of further interest rate cuts, thus easing the pressure for the yuan's depreciation. But from the middle- and long-term perspective, whether China's economic recovery will continue still depends on whether structural reforms are effectively implemented to make economic operations more efficient.