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China’s economic activity strongly rebounds in March

China’s economic activity strongly rebounds in March

Economic activity in China unexpectedly expanded in March, rebounding from last month's strong contraction, but analysts still warned that this recovery is uncertain to continue for a long time, especially as the global spread of Covid-19 continues to threaten external demand and may lead of economic recession.

According to data released by the Chinese National Bureau of Statistics, the Composite PMI, which tracks activity of both manufacturing and services, rebounded to 53.0 in March from a record low of 28.9 in February.

Analysts at the National Bureau explained that this positive reading does not indicate the stability of economic activity in the country in the coming months.

The manufacturing PMI soared to 52 in March, from 35.7 in February, and the services gauge climbed to 52.3, from 29.6 in February.

“More than half of the surveyed enterprises have resumed work and resumed production, better than last month, but it does not mean that China’s economic operation has returned to normal,” China’s National Bureau of Statistics said.

Many analysts also expect a strong contraction in China's GDP in the first quarter of the year and some expect a decline of 9 percent or more year-on-year, which will be the first strong contraction of the economy in three decades.

The V-shape recovery in China’s business activity may not occur in other major economies, as they are still suffering from the impact of the coronavirus, with many countries adopting quarantine and lockdowns.

However, the upbeat report managed to reassure markets, where European shares surged, led by a 1.75 percent increase in the Euro STOXX 600 index.

As of 07:56 GMT, the offshore yuan was 0.16 percent lower versus the U.S. dollar at 7.1026, while the onshore yuan traded 0.08 percent down at 7.0930.

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