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Surveys show China manufacturing improving but growth weak

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BEIJING, China - A survey shows Chinese manufacturing grew in June for the first time in six months but the expansion was weak.

HSBC Corp. said Tuesday its purchasing managers index rose to 50.7 from May's 49.4 on a 100-point scale on which numbers above 50 show growth. A separate index by an industry group, the China Federation of Logistics and Purchasing, rose to 51 from May's 50.8.

HSBC said its survey found output rose for the first time since January but the rate of improvement was "only slight and weaker than the historical average."

Weakness in manufacturing has posed a challenge to Chinese leaders' efforts to nurture growth based on domestic consumption and reduce reliance on trade and investment.

Leaders have ruled out a large-scale stimulus, but facing the risk of politically dangerous job losses, they have launched targeted measures to prop up growth that slumped to 7.4 per cent in the first quarter of the year. Housing prices and sales also have declined, putting pressure on construction and other industries.

The ruling Communist Party's official growth target this year is 7.5 per cent but leaders have tried to play down expectations, saying the expansion might come in under that level.

"The June PMI continued to increase, indicating that steady economic growth has basically been established," said economist Zhang Liqun in a statement issued by the Federation of Logistics and Purchasing.

HSBC said its survey found the strongest growth in new orders in 15 months. Export orders rose for a second month but at a weaker pace than May's 49-month high. Employment declined for an eight straight month but at a slower pace than in May.

Smaller private enterprises are given greater weight in the HSBC survey while big state companies predominate in the official survey.

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