Chinese Economy Leading Asia's Economic Recovery
We’re seeing a strong regional uptrend in Asia. While western economies continue their lackluster performance, many of the countries in the Chinese economic sphere of influence are catching fire economically.
The most immediate and sensitive measure of economic activity is the PMI (purchasing manager’s index) in various countries. Any result in the PMI survey of purchasing managers above 50 indicates economic expansion. As China investors we’re very pleased to see that China’s PMI continues to soar.
The China Manufacturing PMI rose to 56.1 in December – the second fastest rise ever recorded by the survey. The PMI survey indicates a ninth consecutive monthly expansion in new order volume, with companies reporting buoyant demand in both domestic and export markets. We haven’t seen momentum like this since 2005. Manufacturing activity in December expanded at the fastest pace for 20 months.
The good news for China investors is buttressed by equally strong PMI numbers for regional Asian trading partners.
The South Korea manufacturing PMI moved up in December to 52.8 from 52.6 in November. This indicates a continued expansion of the economy. In Taiwan, the manufacturing PMI moved upwards for the ninth successive month, reaching 58.7 from 58.4 in November. The index showed strong demand in both export and domestic markets, although the rate of increase in new orders edged downwards.
Singapore has been less of a success story, with an economic contraction expected in the fourth quarter compared to the previous quarter. Year over year, the fourth quarter is expected to show 3.5% economic expansion.
India appears to be another big winner in the PMI race. The India Manufacturing PMI has hit its highest level since May, rising sharply from 53 to 55.6. India’s PMI has now been above 50 for nine consecutive months, indicating a sustainable trend of expansion.
Japan continues to founder in the grips of what may become another so-called “Lost Decade.” But the new government says it is determined to make inroads on that country’s unaddressed economic malaise.
Japanese Prime Minister Hatoyama says his top priority is to prevent the economy from slipping back into recession by passing budget bills for the current fiscal year and the next. So far, Japan’s record of coming to grips with ingrained economic ills has been dismal but perhaps the new administration can make some inroads at last.
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