ECONOMY-GLOBAL

China manufacturing picks up, India going strong

BEIJING

China's manufacturing sector regained some momentum in August while India and Russia continued to power ahead, cheering investors in the face of signs that sputtering U.S.

recovery was cooling global demand.

A pair of China's manufacturing surveys showed activity picked up last month after a government-engineered slowdown and Indian factories stayed in top gear after Asia's third-largest economy grew at its fastest rate in nearly three years in the last quarter.

Factories in Russia -- part the BRIC quartet of new economic powers alongside China, India and Brazil -- also cranked up their output, expanding at their fastest rate in 28 months largely thanks to the strength of domestic demand.

Fears that recovery in the United States, the world's biggest economy, was petering out and could stall the global upturn led by export-driven Asian economies have haunted markets for weeks pushing the global stock index down more than 3 percent last month.

Trade data from South Korea, the world's ninth largest exporter showed its shipments abroad hit a five-month low last month, while a pair of Chinese surveys provided mixed messages about the strength of demand for the nation's exports.

An official survey compiled by China Federation of Logistics and Purchasing showed a pick-up in new export orders, while one produced by the HSBC bank showed export demand slipping for a third consecutive month.

Yet optimism that Beijing was succeeding in shifting towards a more domestic-driven and sustained growth after a credit-fuelled spurt early this year helped lift Asian stocks and metals markets largely dependent on demand from China.

''This reconfirms our long-held view that China is moderating rather than melting down,'' said Qu Hongbin, chief economist for China at HSBC.

The bank's HSBC purchasing managers' index (PMI) rose to a three-month high of 51.9 in August from 49.4 in July, while the official index also rose, to 51.7 from 51.2.

China, which by some measures has already overtaken Japan as the world's second-largest economy, has been exerting ever growing influence as exporter, importer and investor.

The China effect was at hand in Australia's second quarter economic performance when it grew by 1.2 percent, handily beating market forecasts largely with the help of China's and India's

voracious appetite for Australia's resource riches from coal to wheat.

Sep 2010