China manufacturing still expanding in February: surveys

Taiwan-China finance deals yield first joint venture
Taipei (AFP) March 1, 2010 - Taiwan's Fubon Financial said Monday it was planning to set up a leasing company in China, in the first corporate deal to after Beijing and Taipei signed three financial agreements last year. Fubon, one of the island's leading financial holding companies, said it will join CITIC Group of China, a major mainland conglomerate, to form a 500-million-yuan (73-million-dollar) leasing company in Beijing. "Leasing business on the mainland is booming. We see great potential," a Fubon spokeswoman told AFP. She said Fubon will take a 25-percent stake in the joint venture and CITIC will take 51 percent, while the rest will be held by other Chinese entities.

The joint venture is the first to be announced under the framework of three financial memoranda of understanding signed by Taiwan and China in November and which went into effect in January. Fubon Financial will pour 125 million yuan into the new company through its unit Fubon Venture Capital, while CITIC will take its part through unit CITIC Asset Management, the spokeswoman said. The spokeswoman said the joint venture will extend Fubon's foothold to coastal provinces such as Guangdong in the south and Zhejiang and Jiangsu in the east. She said there was no timetable for when the venture will begin operations, saying it was awaiting regulatory approval.

by Staff Writers
Beijing (AFP) March 1, 2010
China's manufacturing activity continued to expand in February though at a slower pace, surveys by the government and HSBC showed Monday, with the bank expressing optimism for the coming months.

The HSBC China Manufacturing PMI, or purchasing managers' index, fell to 55.8 last month from 57.4 in January, when the indicator hit its highest level since data were first collected in April 2004.

A separate official PMI published by the China Federation of Logistics and Purchasing (CFLP) on Monday showed manufacturing activity fell to 52.0 last month, from 55.8 in January.

A reading above 50 means the sector is expanding, while a reading below 50 indicates an overall decline.

The readings were likely affected by a factory shutdown for Lunar New Year celebrations, which this year fell in February.

"Despite the moderation in the headline China Manufacturing PMI, growth momentum for China's manufacturing sector remains strong, pointing to a further acceleration in industrial activities in the coming quarters," said the bank's chief China economist Hongbin Qu.

Manufacturing production expanded for the 11th month in a row on the back of sharp gains in new business led by firmer client demand, the HSBC survey showed.

It warned that inflation risks were still "considerable" as average input costs rose for the eighth consecutive month in February.

The CFLP meanwhile cautioned that the slowing of manufacturing activities indicated there were "uncertainties" in the recovery of the overall economy.

"We should closely watch the fallback in the new export order index as well and be prudent about the prospects of export growth," said analyst Zhang Liqun, in a more pessimistic assessment that the one offered by HSBC.

In 2008, manufacturing accounted for more than 40 percent of China's economic output, but has since been hit hard by evaporating demand for its products in key export markets such as the United States and Europe.

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