China’s business surveys surprised on the upside in March. In the manufacturing sector, both the official and the Caixin PMI surveys pointed to an expansion in activity (readings above 50.0). The official index rose to 50.5 points (from 49.2 in February) and the private one to 50.8 (from 49.9) supported by an improvement in output and new orders. Outside of the manufacturing sector, the two surveys signaled a strong uptick: 54.8 for the official non-manufacturing PMI survey; 54.4 for the Caixin services PMI. In our view this is another sign that the expansionary measures (tax cuts, infrastructure spending, e.g.) that have been adopted over the past months have begun to have an impact on growth. New export orders are still weak due to low growth in global demand, but domestic orders are picking up. We pencil in relatively slow growth in Q1 (+6.2% y/y) as January and February figures were disappointing, but activity is likely to accelerate from Q2 onwards, bringing full-year growth to +6.4%.
