Signs of light at end of China’s economic tunnel?

The revival of Chinese manufacturing activity in March could signal light at the end of the economic tunnel for the globe’s biggest trading nation – and not a millisecond too soon for an Asia region desperate for growth engines.

The return of the Caixin purchasing managers’ index to expansion territory last month – to 51.1 – marks the fifth straight month of improvement, the best winning streak China has seen in more than two years.

That comes on top of official government PMI data released on March 31 reporting the highest reading in a year, ending a five-month contraction.

Both data series came in better than expected and lent credence to Premier Li Qiang’s assurances that the all-important industrial sector is gaining enough momentum to drive a recovery in the world’s second-biggest economy.

Indeed, upbeat messaging is spreading. Wang Zhe, senior economist from Caixin Insight Group, notes that mainland business optimism is also on the rise.

Analysts at advisory firm China Beige Book write that “March data show the economy is poised for a strong end to Q1. Hiring recorded its longest stretch of improvement since late 2020. Manufacturing picked up, as did retail.”

In the first two months of the year, profits at China’s industrial companies rose 10.2% from a year earlier, prolonging a winning streak that began in August.

“Revenue growth at industrial enterprises picked up markedly as market demand continued to recover and industrial output expanded rapidly,” says Yu Weining, an analyst at the National Bureau of Statistics. “That created favorable conditions for their profits to increase.”

Yet the eyes of the world are fixed on what China’s leaders do next. Hints of greens shoots aside, global investors remain worried