China continues to strengthen its manufacturing industry as its factory sector recorded an increase in June, the first time in almost half a year, HSBC reported Monday. Beijing’s mini-stimulus policy is seen as the major contributing factor for the expansion in the manufacturing activity of the world’s second-largest economic player.

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The statement HSBC released early this week noted that the preliminary purchasing managers’ index (PMI) was recorded at 50.8, higher than the 49.4 final reading in May, The Standard said. Citing a report by the Agence France Presse, the Web site added that the private survey also showed “above 50-level that demarcates expansion from contraction.”

HSBC Hongkong economist, Qu Hongbin explained that the final PMI reading for May can be translated as “stability” in China’s economy. But he warned to look into other sectors, including the property sector, seen as a key driver of China’s economic growth.

“The final PMI reading for May confirmed that the economy is stabilizing, but it is too early to say that it has bottomed out, particularly in light of a weaker property sector,” Hongbin was quoted as saying by the China Post Taiwan.

Hongbin added in the statement that the PMI index improvement in the manufacturing industry is “broad-based with both domestic orders and external demand sub-indices in expansionary territory,'' said The Standard.

Eleven sub-indices of the manufacturing sector all accelerated this month compared to the recorded index in previous months.

Confirming the statement made by Hongbin, CNBC said in its report that “the sub-index for new orders for one, a proxy to measure domestic and foreign demand, rose to 51.8 at the fastest pace in 15 months.”

The impact of China’s improved manufacturing industry was quickly felt in the market, CNBC said, noting that the “Australian dollar rose a quarter of a cent against the greenback, while Asian stocks widened their gains with Australia's benchmark index leading gains by 0.7 percent.”

More economists commended China’s economic policies that led to the increase.

Richard Iley, the chief economist of Asia at BNP Paribas, said that the “authorities’ stealth easing campaign” has resulted in positive direction for China’s economy.

"They've pushed down the normal exchange rate which is a significant break in trend and they've also been sitting on money market yields, lowering bank costs of funding. So in the short term, the medicine is working a bit and I think this is an economy that will bounce over the summer," Iley added, according to CNBC.

For HSBC, the mini-stimulus implemented by China has done the trick.

"This month's improvement is consistent with data suggesting that the authorities' mini-stimulus are filtering through to the real economy,'' Hongbin reiterated, according to The Standard.

TagsChina PMI, China manufacturing