Foreign Policy Blogs

Manufacturing Sector Expansion; Alternative Energy Stimulus Plan; Geithner's China Visit

China’s official purchaser managers’ index (PMI) for May again reached a reading above 50, signalling a third month of expansion for the country’s manufacturing sector. While the index dropped slightly to 53.1 from April’s 53.3, it remained clearly above the contraction threshold of 50. Analysts see the positive PMI indicator as a sign that the government’s stimulus package is starting to have an impact and China’s recovery is under way. While export demand remains weak, it is more than offset by strong growth in domestic demand, especially government’s fixed asset investment.

China’s National Energy Administration said at a news conference on June 1 it would soon submit a stimulus plan for the alternative energy sector for approval by the State Council and the National Development and Reform Commission. The plan will cover wind energy, biomass and solar power, as well as clean coal and biofuel technologies.

China has expressed confidence in the strength and dynamism of the U.S. economy, U.S. Treasury Secretary Timothy Geithner said in an interview during his two-day visit to China. While Beijing remains positive about U.S. economic recovery in the long term, some officials expressed doubts about the immediate recovery and debt reduction of the U.S. Mr. Geithner’s visit will be followed by strategic and economic talks between China and the U.S. in Washington at the end of July.

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