China’s advanced manufacturing upgrade backed to gather pace, driven by top priority status in five-year plan

Beijing outlined a comprehensive plan to upgrade its manufacturing capabilities by 2025 via eight priority areas, including robotics, aircraft engines, new energy vehicles and smart cars

Hi-tech manufacturing and equipment manufacturing outperformed overall manufacturing in March’s official manufacturing purchasing managers’ index (PMI)

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The official manufacturing PMI – a survey of sentiment among factory owners in the world’s second-largest economy – rose to 51.9 in March from 50.6 in February. Photo: Bloomberg

Sidney Leng,Karen Yeung,Su-Lin TanandOrange Wang

Published: 2:41pm, 31 Mar 2021Updated: 3:10pm, 31 Mar 2021

China’s advanced manufacturing “can continue to outperform” traditional manufacturing, driven by heavy policy support from Beijing, after the sector led a key monthly indicator of economic activities in March.

Beijing introduced a comprehensive plan during the National People’s Congress (NPC) earlier this month to upgrade its manufacturing capabilities by 2025 via eight priority areas.

China’s overall official manufacturing purchasing managers’ index (PMI) – a survey of sentiment among factory owners – rose to 51.9 in March from 50.6 in February, according to data released by National Bureau of Statistics (NBS) on Wednesday. A reading above 50 indicates growth in sector activity, while a reading below the mark represents contraction. The higher the reading above 50, the faster the pace of expansion.

Within the survey of sentiment among factory owners in the world’s second-largest economy, the readings for hi-tech manufacturing and equipment manufacturing were 53.9 and 52.9, respectively, two and one percentage points higher than the overall manufacturing PMI.

The government has made it clear this is a top policy initiative in the new [five-year plan]. There are tax benefits as well as credit support

Zhiwei Zhang

“I expect [advanced manufacturing] to continue to outperform relative to the conventional manufacturing sector, given the policy support. The government has made it clear this is a top policy initiative in the new [five-year plan]. There are tax benefits as well as credit support,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.