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China's economy stabilising; export orders tick up

(Agencies)
Updated: 2009-06-01 15:52

Not Getting Worse

"The Chinese economy is recovering, and the May PMIs have further proven that this argument is correct," said Feng Yuming, an analyst with Orient Securities in Shanghai.

But Feng said the export sector remained weak despite the slight improvement in the export orders sub-indexes.

Related readings:  May PMI shows manufacturing in expansion  China PMI expands, signaling recovery  China to bolster E Asia economy: UN report  Govt investment begins to benefit economy  ADB president: China's economy may have bottomed out

"We can only say the situation is not getting worse," he said.

Chinese appliance and top TV maker TCL Corp said on Monday it expects its sales to grow by at least 7 percent this year to more than 40 billion yuan ($5.9 billion) as it targets the country's increasingly rich consumers.

The government's policy of encouraging home appliance purchases in rural areas is helping domestic sales, but overseas demand continues to sputter, TCL vice president He Chengming told Reuters while in Taiwan Province for a PC trade fair.

The CLSA survey showed few signals of weakness and signalled that the industrial sector is on track for a sustainable recovery, said Andy Rothman, an economist with CLSA in Shanghai.

Rothman noted that the overall new orders sub-index rose strongly for the second straight month in May, to 53.4 from 50.9, driven mainly by healthy domestic demand.

Companies also continued to draw down their inventories of finished goods, suggesting that output growth could be maintained in the months ahead.

"But we want to repeat one point we made last month: it is unrealistic to expect the recovery to continue on an uninterrupted path upwards," he said in a note to clients.

"Anticipate some volatility in the coming couple of quarters, but dips in the data should be seen as buying opportunities."

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