Giving momentum to the economic recovery, Chinese manufacturing indicator has expanded in the last month. This sustained improvement in the manufacturing indicator, as suggested by Purchasing Manager’s Index (PMI), has lately provided a brief relief to the second largest economy of the world. According to the National Bureau of Statistics and China Federation of Logistics and Purchasing, the PMI had stood at a level of 50.9, an 11 month high reading. The PMI reading was at a level of 50.1 in the month of February.

This improvement in Chinese manufacturing sector has improved the market sentiments and confidence amongst the investors, surpassing the weak factory output data witnessed in the month of January-February. The rebound in the manufacturing has finally strengthened the export-aspect of Chinese economy. With this expansion, economists are also coming with the views of possible inflation amidst faster growth rate of expansion in the sector, which could consequently invite a tighter monetary regime from the Chinese central bank.

In line with improving manufacturing sector in Chinese economy, the stock market has also started to head towards north, thanks to the improved business confidence level and optimistic market sentiments. Not only the Shanghai Composite Index has risen by 0.2 percent lately, but interestingly, Chinese currency, Yuan, has touched a 19-year high cross currency valuation.

With observed optimism in the retail sales and overall market indicators, the Chinese economy has lately seen an improvement or rise in Foreign Direct Investment for the first time in 9 months. Having export order climbed to 50.9 from 47.3 level and decline in manufacturer’s input prices, as a measure of inflation, the Chinese economy is believed to have surpassed the economic hurdle for the time being.

Amidst the focus of Chinese government in the domestic economy and witnessed optimism in the largest economy in the world, i.e., the U.S., mainly in housing, retail sales and employment conditions, the improved appetite of the U.S. for import and strong Chinese manufacturing-propensity to export, the bright horizons for Chinese economy could be awaiting just ahead.

It is the time that will hopefully tell whether the Chinese domestic-economy driven policy would be sufficient enough to boost the second largest economy of the world or the improving U.S. economy would have to contribute as well to head China towards the north. For now, all we can do is wait-and-watch the momentums of these economic giants.