GLOBALLOGISTICS ‹ CONTINUED FROM PAGE 22
Red Manufacturing In the Black
E ven with foreign demand for consumable goods largely dented by a global recession, China’s economic engine continues to fire on all cylinders. The country can thank its ever-expanding middle class for the spark. Production accounts for more than 40 percent of China’s economy, which has been hit hard by evaporating demand for its products in key export markets such as the United States and Europe. Even still, manufacturing in China hit a 12-month high in July 2009, according to a leading independent index, thanks in great part to government stimulus and domes- tic demand. The CLSA China Purchasing Managers Index,
or PMI, rose to 52.8 last month, the highest since July 2008, when it stood at 53.3. A reading higher than 50 means the sector is expanding; a reading lower than 50 indicates an over- all decline. Domestic demand was the principal driver behind new-order growth, while external demand remained lackluster in July, despite rising for a second succes- sive month. The independent read- ing confirms official data suggesting that the recov- ery trend of the key sector is consolidating. The China Federation of Logistics and Purchasing’s figures show the sector expanded in July for the fifth consecutive month to 53.3, up from 53.2 in June.
Despite lackluster demand from key export markets such as the United States and Europe, China’s economy is showing its mettle. Strong domestic consumption and government spending have triggered a spike in production.
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The official index tends to be more optimistic because it attaches greater weight to state-owned enterprises, which usually follow government directions and benefit first from stimulus policies. To point, Beijing announced a US $585-billion stimulus package last year in a bid to prop up growth in the country by boosting investment in infrastructure and other gov- ernment-backed projects. Beyond positive manufacturing data, China’s economy expanded by 7.9 percent in the sec- ond quarter, up from 6.1 percent in the first quarter, mainly as a result of this government spending. ■
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24 Inbound Logistics • September 2009
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