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China manufacturing hits multi-month high amid policy support

Manufacturing activity in China has picked up as the impact from a series of stimulus measures by the government kicks in. Policy support has been vital in tackling relatively low economic growth rates of late.

Chinese factory activity expanded at its fastest pace this year in June, the National Bureau of Statistics reported Tuesday.

The official purchasing managers index (PMI) hit a level of 51 last month, up from 50.8 in May, marking the best performance since a similar reading in December of 2013.

The index is a closely watched

indicator of the health of the national economy

, with any reading above 50 showing growth, and anything below it pointing to contraction.

Sustainable recovery?

Analysts cited the impact of the government's package of stimulus measures to fuel slumping growth. They argued the worst was over for the Chinese economy, although the cooling property sector continued to be a cause for alarm.

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China's move towards a free market economy

"The economy has turned the corner, but it will take time for the recovery to become more broad-based," HSBC economist Julia R Wang commented. "Infrastructure investment needs to pick up more strongly in the coming months to lift demand."

On Monday, Chinese regulators announced vital changes in the way it calculates banks' loan-to-deposit ratio in order to help channel more credit into the real economy.

hg/rs (AFP, Reuters)

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