Improved manufacturing activities in China; best for 16 months

China's manufacturing activity increased its growth rate in August, reaching a 16-month high, allaying anxieties of a distinctive downturn in its overall economy. The official Purchasing Managers' Index (PMI) increased to 51 from 50.3 in July.

The PMI is an important measure of the sector's well-being as well as a gauge of the overall economy, a reading above 50 denotes an expansion in manufacturing activities.
China, the world's second-largest economy and world's biggest exporter, has made some distinct measures to strengthen its overall economy after its growth rate recently slowed for 2 quarters in a row .

"We are witnessing better signs of economic conditions strengthening,"stated Haibin Zhu, chief China economist at JP Morgan in Hong Kong .

'Concrete policy announcement'

China's overall economy expanded by 7 .5% in the April to June quarter from one year previously - down from a growth rate of 7.7% in the earlier 3 months of the year.
There were worries that China's growth rate might possibly slow down further in the approaching months, not least because of a downturn in demand in China manufactured goods exports from essential marketplaces such as the US and Europe, which has affected China's manufacturing and export sectors which are these fundamental drivers of China's economic growth.

Influenced by the sluggish performance in exterior demand, Beijing has long been seeking to improve local consumption so that they can re-balance the overall economy and therefore support increased levels of growth. An example being last month when the government suspended value added tax and also turnover tax for small enterprises with monthly sales of below 20 ,000 yuan ($3 ,257;£2 ,125). The plan is predicted to help over 6 million SME businesses and so increase employment.

Beijing has declared that it may instigate steps to streamline customs clearance processes which will reduce operational costs and help facilitate more exports for SME companies. Mr Haibin stated, "the current shift in the policy position and more definite policy announcement" was a significant reason for the turnaround in the manufacturing sector.