When China sneeze, the world catches cold, as the saying goes. However, if China economy recovers, how will the global market react?
Once again, there were signs of recovery for the country’s economic after it was heavily embattled by the coronavirus pandemic earlier this year.
In May, both the official and private Purchasing Manufacturing Index (PMI) expanded, beating market estimates as production activities recovered faster than expected.
Private sector take lead in recovery
During the month of May, the Caixin/Markit PMI reached 50.7 readings, higher than April reading of 49.4 and beating market estimate of 49.6.
The Caixin/Markit PMI mainly polled the private firms and the positive data suggested that private manufacturing activities had picked up in May, as the rebound was the fastest in 9 years, tracing back to Jan 2011.
Though China’s private manufacturing showed strong recovery, market participants were concerned over weak external demand due to the various COVID-19 lockdowns as well as the rising US and China trade tensions.
Booming construction sector to spearhead growth
On the contrary, the state-owned enterprises (SOE) took a more of gradual recovery after the official PMI recorded at expansion territory with good reading at 50.6 in May.
This was below market estimate of 51 readings, and slightly lowered than 50.8 reading recorded in April, according to data from National Bureau of Statistics (NBS).
However, the trade data showed that the country’s construction sector is picking up and reached a high index of 60.8 in May, while the country’s service industry is still on gradual recovery at 52.3 readings.
Going forward, China might see more growth drivers from its internal market demands rather than from aboard due to the rising global coronavirus cases.
