The nation is grappling with weak domestic demand, ongoing challenges in the property market, and rising government debt, all of which pose risks to Beijing's growth objectives for the year.
In October, China's Purchasing Managers' Index (PMI), a critical gauge of industrial performance, registered at 50.1, as reported by the National Bureau of Statistics (NBS), an increase from September's 49.8.
A PMI reading above 50 signifies growth in manufacturing, while a figure below that indicates a decline.
The index had been on a downward trend for six consecutive months, with the last positive reading occurring in April at 50.4.
The October results also surpassed analysts' expectations, who had predicted a PMI of 49.9, according to a Bloomberg survey.
The NBS noted that the latest data indicates a recovery in the manufacturing sector's business environment.
Lynn Song, chief economist for Greater China at ING, remarked that while the 50.1 figure represents the slightest expansion for the PMI, it defies expectations of ongoing contraction.
She further stated that the recent data is a promising indication that the slight recovery in industrial production observed in September may persist.
In recent weeks, Beijing has introduced various measures to inject liquidity into the economy, including significant interest rate reductions and relaxed home-buying regulations.
Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, expressed in a note on Thursday that he anticipates a moderate improvement in economic momentum as monetary and fiscal policies become more accommodating.
However, many investors remain cautious, awaiting official confirmation of a substantial fiscal stimulus plan, which is anticipated to be discussed at a meeting of senior officials next week.
Additional enhancement
The standing committee of the National People’s Congress — China's legislative body — will convene in Beijing from November 4 to 8 for discussions that state media indicate will focus on economic planning.
Julian Evans-Pritchard of Capital Economics noted, “The PMIs have exaggerated the weakness in China’s economy over the past year.”
He further stated, “Official surveys indicate an additional enhancement in October, with growth in manufacturing and services more than compensating for a continued decline in construction.”
Beijing aims for an annual growth rate of approximately five percent this year, a target that officials have recently affirmed is attainable.
The International Monetary Fund slightly adjusted its growth forecast for China this year to 4.8 percent in a report released last week.
Zhang from Pinpoint Asset Management expressed his belief that Beijing’s growth target has been “translated into actions,” and he anticipates “more indications” regarding China’s forthcoming economic policy following next week’s U.S. elections.