Chinese manufacturing index has exhibited first optimistic signal in 13 months, bracing the sluggish economy after a seven-quarter economic slowdown. With current reading of 50.4 level for purchasing managers’ index, which was at 49.5 level in the month of October, the Chinese economy is finally expanding.

“The economic recovery continues to gain momentum,” opined Qu Hongbin, chief Chinese economist at HSBC. Further, he cited current recovery to be at early stage and perspective about current weak global economic scenario. This statement from Hongbin, as per analysts, is believed to be a mere indication of possible impact of international economic downturns and its tumbling effect on Chinese economic growth.

With current economic recovery, analysts and economists believe that further monetary stimulus may not be necessary for Chinese economy in the form of reserve cut or buy-back options. Despite fragile economic outlook, China’s gross domestic product this year is expected to grow to 7.7 percent, though least growth rate since 1999. Similarly growth for 2013 is projected to be around 8.1 percent, slight growth from current year.

At one side, where China is facing serious problems with internal/domestic consumption, crisis in Euro zone is brutally affecting the export of Chinese production. With fall in demand in Euro zone and even in Japan (demand for industrial products), it will definitely be a challenge for China to come up with optimistic measures to cope with current external recession and simultaneously boost domestic consumerism.

Considering US economic indicators, most importantly improving housing, manufacturing and automobile sector, China can be hopeful to maintain or even improve exports to US. With improved economic situation in US, improved unemployment situation is mainly believed to be catalyst to improve China exports, at least till the end of 2012, i.e., prior to the US fiscal cliff. If political leaders in US could not come up with any solutions regarding the much feared fiscal cliff, Chinese economy along with US economy, will surely traumatize the economic fundamentals, eventually affecting global economic outlook.