China's PMI rebounds in Aug
Updated: 2013-09-02 08:43Despite the positive signs, the gap between big companies and small businesses, which are the pillars of employment, continues to widen.
The PMI reading for big firms has stayed above 50 percent for 12 straight months, while that of small companies has stayed below 50 percent for 17 consecutive months.
This means the plight of small business has not been reversed, and the government needs to step up the implementation of favorable measures, Zhao Qinghe said.
The promising new data have reversed the bearish tones at investment banks.
Ma Jun, chief economist at the Deutsche Bank Great China, raised China's GDP growth forecast to 7.7 percent in the second half.
"If PMI readings keep growing at the current level, the industrial output growth could increase to 9.7 percent in the third quarter, and that will eventually shore up GDP," he said.
With businesses intending to replenish inventories, China's GDP growth will accelerate in the third quarter, said Barclays China economist Chang Jian.
The data have also boosted the confidence of entrepreneurs. CFLP data showed the business outlook sub-index for August climbed by 300 basis points to 59.4 percent.
Despite the strong recovery signs in the short term, economists warned the long-term prospects remain uncertain.
Liu Yuhui, an economist at the Chinese Academy of Social Sciences, said healthy growth is still restrained by excessive reliance on investment, overcapacity and spiraling debts.
Zhang Liqun, a researcher at the Development Research Center of the State Council, said the country is at a critical stage of structural reform. Companies, especially small businesses, have to make strong efforts to cope with the new conditions.
Having faced a prolonged slowdown in the past two years, the Chinese government resolved to rebalance its outdated growth model by pursuing structural reforms instead of initiating massive stimulus programs.
In mid-August, Premier Li Keqiang underscored the role of reform in promoting sustainable growth, pledging to keep the economy from big fluctuations and maintain steady performance.
"To achieve sustainable and healthy development, we should stick to rebalancing the economy while keeping growth, employment and inflation within a reasonable range," he said at a meeting in Lanzhou City in Gansu Province, which was attended by provincial heads from the country's western regions.