2014.06.0205:41:03UTC+00Signs positive for upturn in China after torrid quarter

The world’s second largest economy seems to be headed towards a resurgence based on newly released manufacturing index figures and recent policy measures designed by the Beijing government.

Good news came last Sunday through the Purchasing Managers’ Index or PMI, a tool used to assess the performance of the manufacturing sector, that was shared by the National Bureau of Statistics. Numbers show that the PMI in May rose to 50.8 from 50.4 in April, beating the expected 50.6.

According to statements from the Development Research Center included in the PMI results, this could be proof of an ongoing economic stabilization since scores above 50 in the index indicate an expansion in the sector while the opposite is true for scores that fall below the threshold. China is also hoping that the expanding PMI will usher in similar encouraging results in the other incoming reports of economic indicators to showcase its regained strength.

These results follow a first quarter where economic growth levels in the country fell to 7.4%, a low not seen in 18 months. If this trend continues, China will be set to have its weakest annual performance in 24 years by the end of the year. The government is targeting an economic expansion of 7.5% in 2014, greater than the 7.3% growth expected by economists in a poll.

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The improved PMI was buoyed by an increase in nine of its sub-indices from a possible thirteen. Foremost among these is the rise of both domestic and foreign demand reflected as new orders. This sub-index climbed from its 51.2 grade in April to its highest in 6 months of 52.3 in May. Orders for exports experienced a slight increase as well to 49.3 from 49.1 during the same months to slowly make its way up closer to the 50 mark for growth.

Recently, officials of China have conveyed their intent to sustain this economic development by increasing measures to lower funding costs and unburdening corporations of operational costs. Among those proposed is a reduction in business administrative fees, more lenient reserve requirements for banks, and giving financial support to small companies through an upscale in bond financing.

Officials have earlier pushed for the early completion of railway and housing projects as well as discounted tax rates for micro enterprises to spur the economy. They have already expressed their dismissal of any major fiscal stimulus preferring instead a have a slow growth paired with reforms.

To complement the official PMI, an additional report that features smaller and private companies is expected out Tuesday from the HSBC.