China's February manufacturing activity sees fastest growth in over a decade

China's manufacturing activity expanded at the fastest pace in over a decade in February, smashing expectations as production zoomed after the lifting of Covid curbs. On Wednesday (March 1), the country's official manufacturing purchasing managers' index (PMI) climbed to 52.6 in February compared to 50.1 in January, the news agency Reuters reported. The PMI far exceeded an analyst forecast of 50.5 and was the highest reading since April 2012.

Global markets cheered the increase in PMI with Asian stocks and the Australian dollar reversing earlier losses, the offshore yuan perking up and oil rallying.

Julian Evans-Pritchard, the head of China Economics at Capital Economics, said the high PMI readings partly reflected the Chinese economy's weak starting point coming into this year and were likely to drop back before long as the pace of recovery slowed. "We had already been expecting a rapid near-term rebound, but the latest data suggest that even our above-consensus forecasts for growth of 5.5% this year may prove too conservative," Pritchard said, Reuters reported.

Meanwhile, Zhou Hao, an economist at Guotai Junan International, said the PMI readings provided a positive note for the upcoming National People's Congress. "We expect the government to roll out further supportive policies to cement the economic recovery," Hao added.

In 2022, the Chinese economy recorded one of its worst years in nearly half a century due to the strict Covid restrictions and subsequent widespread infections. The PMI on Wednesday showed that new export orders rose for the first time in nearly two years.

On Friday, the country's central bank said that the domestic economy was expected to generally rebound this year, although the external environment remained ''severe and complex."

(With inputs from agencies)

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