TOP ECONOMIST: 5 Factors Driving Growth In China Right Now

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China’s official PMI rose to 53.3 in April, from 53.1 in March, staying well above the contractionary level of 50.New orders eased to 54.5 from 55.1 the previous month, though new export orders climbed to 52.2, showing that the drop was driven by weaker domestic orders. 

Output climbed to 57.2 from 55.2 the previous month showing strong demand including the “restocking behaviour by manufacturers”, according to Ting Lu, China economist for Bank of America-Merrill Lynch writes.

In his latest note Lu says he expects GDP to grow 8.5 per cent year-over-year in the second quarter, from 8.1 per cent in the first. He also says there are five key factors behind the overall economic growth:

  1. Pro-growth policies.
  2. Pent up demand for restocking by manufacturers.
  3. The end of China’s coldest winter in 27 years.
  4. A boost in infrastructure investment “after the settlement of political dusts (especially railway) and wrap up of local government reshuffling.”
  5. Business confidence improved on account of some stability in China’s property sector and in global fundamentals.

Lu maintains his overall GDP growth forecast of 8.6 per cent for 2012.

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