CHINESE manufacturing continued its growth momentum for the fourth straight month in June, reinforcing optimism that an economic recovery may be under way, two surveys showed yesterday.
The official Purchasing Managers Index, compiled by the China Federation of Logistics and Purchasing as a measure of the nation’s manufacturing activities, reached 53.2 last month following a reading of 53.1 in May and 53.5 in April.
The figure has been above 50 – the threshold denoting expansion – for four consecutive months.
In addition, the brokerage firm CLSA said yesterday its China PMI rose to 51.8 in June from 51.2 in May, the highest level since July last year and the third straight month for the index to record growth.
“After softening slightly in May, China’s official PMI improved again last month and showed sequential economic expansion. We take it as a signal that the green shoots of economic recovery have strengthened and are likely to blossom in the second half of 2009,” said Wang Qing, a Morgan Stanley economist.
“Continuity of accommodative monetary and financial conditions and follow-through in the implementation of the fiscal stimulus package should bring about robust growth in GDP in the second half of this year,” Wang said. “In addition, private investment will likely catch up, as the recovery in property sales remains strong and industrial profits recently registered significant improvement.”
Eric Fishwick, head of Economic Research at CLSA, said the PMI increases confirmed that growth was solidifying in manufacturing.
“Further improvement in export orders is a surprise, and domestic demand for manufacturing should continue to grow, as policy and the upturn in residential construction are gaining traction,” Fishwick said.
Both Wang and Fishwick expect the PMI to continue expanding in the coming months.
The production index under the official PMI strengthened to 57.1 in June from 56.9 in May, supported mainly by domestic demand, with new orders standing at 55.5 last month.
Economists said the decline in China’s exports should bottom out soon as new export orders reflected in the PMI rose to 51.4 in June, from 50.1 in May when they first entered expansionary territory.
The employment figure climbed back above 50 for the first time since last September, hitting 50.1 in June from 49.9 a month earlier, implying the country’s job-protection and creation policy is working.
China’s gross domestic product grew 6.1 percent in the first quarter from a year earlier, the weakest pace since at least 1992. Economists generally expect better performance when second-quarter results are posted later this month.
The main concern is weak external demand. China’s exports fell 26.4 percent in May from a year earlier, a record low in at least 14 years.
CHINESE manufacturing continued its growth momentum for the fourth straight month in June, reinforcing optimism that an economic recovery may be under way, two surveys showed yesterday.
The official Purchasing Managers Index, compiled by the China Federation of Logistics and Purchasing as a measure of the nation’s manufacturing activities, reached 53.2 last month following a reading of 53.1 in May and 53.5 in April.
The figure has been above 50 – the threshold denoting expansion – for four consecutive months.
In addition, the brokerage firm CLSA said yesterday its China PMI rose to 51.8 in June from 51.2 in May, the highest level since July last year and the third straight month for the index to record growth.
“After softening slightly in May, China’s official PMI improved again last month and showed sequential economic expansion. We take it as a signal that the green shoots of economic recovery have strengthened and are likely to blossom in the second half of 2009,” said Wang Qing, a Morgan Stanley economist.
“Continuity of accommodative monetary and financial conditions and follow-through in the implementation of the fiscal stimulus package should bring about robust growth in GDP in the second half of this year,” Wang said. “In addition, private investment will likely catch up, as the recovery in property sales remains strong and industrial profits recently registered significant improvement.”
Eric Fishwick, head of Economic Research at CLSA, said the PMI increases confirmed that growth was solidifying in manufacturing.
“Further improvement in export orders is a surprise, and domestic demand for manufacturing should continue to grow, as policy and the upturn in residential construction are gaining traction,” Fishwick said.
Both Wang and Fishwick expect the PMI to continue expanding in the coming months.
The production index under the official PMI strengthened to 57.1 in June from 56.9 in May, supported mainly by domestic demand, with new orders standing at 55.5 last month.
Economists said the decline in China’s exports should bottom out soon as new export orders reflected in the PMI rose to 51.4 in June, from 50.1 in May when they first entered expansionary territory.
The employment figure climbed back above 50 for the first time since last September, hitting 50.1 in June from 49.9 a month earlier, implying the country’s job-protection and creation policy is working.
China’s gross domestic product grew 6.1 percent in the first quarter from a year earlier, the weakest pace since at least 1992. Economists generally expect better performance when second-quarter results are posted later this month.
The main concern is weak external demand. China’s exports fell 26.4 percent in May from a year earlier, a record low in at least 14 years.
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Vietnam faces an extra cost of more than US$1.7 billion as the lack of port logistics leads local companies to have their shipments transshipped via ports in Hong Kong and Singapore.
The country now had 114 seaports, most of them small, and that only 14 were considered internationally moderate such as Haiphong, Cat Lai and VICT, but they were only riverports.
Nguyen Tuan Hoa, deputy director of the Development Study Center under the HCMC government, said total throughput at Vietnam ports amounted to about 178 million tons, including 4.3 million TEUs.
Logistic fees in developed countries are much higher than in developing countries like Vietnam, said Hoa, who has been joining hands with other scientists to undertake a study on logistics development in HCMC.
He said logistics expenses in the United States made up 9.5% of GDP, 11% in Japan, 16% in South Korea, 21.6% in China and 25% of GDP in Vietnam.
Vietnam’s spending on logistics services last year totaled about US$17 billion while GDP was US$71 billion, he said at an international conference on logistics risk management in HCMC last Thursday.
He said logistics played a major role in the economic development of a country which depends heavily on exports.
There are 800-900 businesses active in the logistics field but a majority of them are in HCMC where the logistics market has a yearly value of US$12 billion, 60% of the country’s total, while 70% of import and export shipments transit through HCMC.
Le Van Bay, an expert in logistics at the HCMC University of Technical Education, said most logistics services companies in Vietnam were not yet specialized, thus lacking professionalism.
Hoa said the country now had 114 seaports, most of them small, and that only 14 were considered internationally moderate such as Haiphong, Cat Lai and VICT, but they were only riverports.
“We are lacking deep-water ports serving as international transshipment points, so Vietnam’s exports are transshipped to Hong Kong or Singapore before heading for foreign markets,” said Hoa.
Consequently, for every container of Vietnam’s export goods, local businesses have to pay an extra charge for transshipment of US$400.
Shanghai Daily
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China’s total value of logistics in 2007 reached CNY75.2282 trillion, up 26.2% year on year, boosted by continuous rapid growth in China’s economy. According to the conservative estimation by the China Federation of Logistics and Purchasing, China’s logistics industry is expected to have a compound annual growth rate of 16 percent in the forthcoming three years.
In 2007, the added value of China logistics industry was CNY1.7 trillion, up 20.3% year on year, accounting for 17.6% of the total of China service industry and 6.9% of China’s GDP.
Source: China View
In 2007, China’s total cargo transport volume was 22.53 billion tons and its turnover volume of freight transport was 10.1 trillion tons/kilometers, up 10.7% and 11.8% year on year respectively. As for the distribution by modes of transportation, water transportation occupied 67 percent of China’s turnover volume of freight transport, railway transportation 22.5 percent, road transportation 10.5% and aviation transportation 0.1 percent.
This report is based on the authoritative statistics from the China Federation of Logistics and Purchasing, the National Development and Reform Commission, the Logistics Association of China, the China Auto Logistics Association of CFIP, the General Administration of Customs, the State Information Center, and the National Bureau of Statistics. The report makes an in-depth analysis on the current situation, segmented markets and main companies of China’s logistics industry, and also makes the forecasts on the development trend of China’s logistics industry in 2008
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