Manufacturing defies Mideast energy shock

China's manufacturing sector maintained its expansion streak for a second month in April, signaling sustained growth momentum despite a global energy shock triggered by tensions in the Middle East.

The official manufacturing Purchasing Managers' Index was 50.3 in April, according to National Bureau of Statistics data released on Thursday. While a marginal 0.1-point dip from March, the figure remains above the critical 50-point threshold that separates expansion from contraction.

The data revealed a substantial recovery for the backbone of the country's private sector. The PMI for small and medium-sized enterprises stood at 50.1 and 50.5, respectively, up 0.8 and 1.5 percentage points from March, with both returning to expansion territory, the NBS said.

Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating International, attributed the rebound to the continued application of supportive macro policies targeting the real economy.

"The improvement was likely supported by a package of structural monetary and fiscal policy measures introduced earlier this year to strengthen financing support for private SMEs," Wang said.

The rapid development of "new quality productive forces", Wang said, is playing an increasingly stronger role in supporting overall macroeconomic growth.

Notably, high-tech manufacturing posted a PMI of 52.2 in April, up 0.1 percentage point from March, while equipment manufacturing recorded a PMI of 51.8, up 0.3 percentage points from the previous month.

Despite the escalation of tensions in the Middle East threatening global supply chains, analysts suggest China is uniquely buffered.

"Although Middle East tensions continue to disrupt global supply chains, China has maintained strong competitiveness in foreign trade markets," said Wen Tao, an analyst at China Logistics Information Center.

Jeremy Zook, lead analyst for China at Fitch Ratings, added that the country is relatively well positioned to withstand the energy shock, thanks to its sizable oil reserves, strong refining capacity and current energy mix.

Near-term risks of energy shortages remain limited, Zook said, adding that China's export outlook is expected to stay resilient, though growth may moderate over the coming year.

Despite the overall expansion in manufacturing, nonmanufacturing activity softened in April, with the construction sector remaining under pressure.

The construction PMI came in at 48.0, down 1.3 percentage points from March and staying in contraction territory, according to the NBS.

Wang, the analyst, said the weaker reading reflected the continued drag from the ongoing adjustment in the real estate market, and pointed to the need to further strengthen investment momentum.

Wang said there remains ample policy room to further stabilize the real estate market and to better cope with external uncertainties.

zhangchenxu@chinadaily.com.cn