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Chinese manufacturing shows upsurge

Chinese manufacturing gained momentum for a fourth straight month in March, helped by a recovery in the cars, tobacco and electronics sectors.

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, rose 2.1 points to 53.1 in March, up from February's 51.0 and January's 50.5. A reading above 50 signifies expansion.

The rise in new factory orders suggests a recovery in various sectors, though federation analyst Zhang Liqun said there were still worrying signs of weakness in exports, investment and consumer demand.

China often sees an upsurge in manufacturing and construction in the spring, following the annual Lunar New Year holidays and a national legislative session in March.

"So it is important not to view this as a sign of out-and-out strength," IHS Global Insight's Alistair Thornton said in an analysis.

"Nonetheless, de facto credit easing has clearly buoyed sentiment and should lay the foundation for a better second half. At the very least, things are not getting worse."

Beijing faces a challenge in keeping growth from stalling while avoiding an inflationary rebound, he said.

China's economic growth declined to 8.9% in the final quarter of last year after Beijing hiked interest rates and tightened other controls to cool inflation.

Chinese leaders reversed course in December and promised more bank lending to help companies cope with the slump in global demand, but changes have been gradual.

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