China's Factory Activity Unexpectedly Expands in March

Apr 01, 2016 08:40 AM EDT

A general view of Qian'an steelworks of Shougang Corporation on January 20, 2016 in Tangshan, China. Shougang Corporation is one of the most largest steel enterprise in China. Tangshan is the largest steel manufacturing city in China. Shougang Corporation had moved out all steelworks from Beijing before 2008 due to serious air pollution. (Photo by Xiaolu Chu/Getty Images)

China's manufacturing activity unexpectedly picked up in March, further adding to signs that the country's economic pressures are easing.

According to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing, the country's purchasing managers' index (PMI) stood at 50.2 in March, higher than the 49.3 reading expected by analysts surveyed by Reuters.

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The March PMI was also up from February's 49 and above the 50-point mark that separates growth from contraction on a monthly basis.

Analysts surveyed by Reuters were expecting the March PMI to mark the seventh straight month of contraction.

The index fell to its lowest level since August 2012, as China is seeking new economic growth engines amid a campaign to cut industrial overcapacity.

The country's service sector activity also improved last month after posting a downward trend since December, according to the official data released on Friday.

The non-manufacturing sector PMI came in at 53.8 in March, up from 52.7 in February and 53.5 in January.

Meanwhile, China's major state-owned banks are bracing for tough times ahead as the country's economy continues to post slower growth.

The head of three of China's "Big Four" banks announced gearing up for tough times this year after they cut dividends and reported near-flat or falling quarterly profits.

Bank of China (BOC) president Chen Siqing said it is tough for commercial banks to make money as the country's economy continues to be challenged by big downward pressure.

BOC's Q4 profit rose just 2percent to Rmb39 billion from a year ago. The Industrial and Commercial Bank of China, which is the world's biggest lender, posted USD8.55bn Q4 profit, unchanged from the same period last year. China Construction Bank's profit dropped 2.5 percent in Q4.

Data from the China Banking Regulatory Commission showed that non-performing loans (NPLs) at Chinese banks ballooned to a 10-year high of Rmb1.27tr (USD174bn), or 1.67 percent of all outstanding loans at the end of 2015.

TagsChina PMI, China Factory Activity, China manufacturing