China's manufacturing sector roared ahead in March as output and new orders surged despite worries about the world economy, an official survey showed on Tuesday.
A purchasing managers' index compiled on behalf of the National Bureau of Statistics rose to 58.4 in March from 53.4 in February. A reading over 50 indicates an expansion of activity, while one below 50 suggests contraction.
The report showed purchasing managers were optimistic about the outlook because of strong demand and their pricing power, according to Zhang Liqun, a researcher with the Development Research Centre, a think-tank that reports to China's cabinet.
But Zhang also highlighted a range of economic uncertainties that he said were not captured in the headline PMI.
"The weakening of the U.S. economy due to subprime problems will have a negative impact on the global and the Chinese economies. This, plus the appreciation of the yuan and rising labor, resource and environmental costs, means the outlook for Chinese export growth is not so optimistic," he said.
Zhang's comments were issued by the China Federation of Logistics and Purchasing, which conducts the survey.
More companies in the latest poll complained about rising raw material costs but fewer respondents experienced cashflow problems, according to the report.