China manufacturing PMI drops in April

China's factory engine slowed in April, as new export orders shrank. The latest official purchasing managers' index fell to 50.6 points from an 11 month high of 50.9 in March. Analysts say China's growth momentum is not yet solid.

Zhang Liqun, a researcher of Dev't Research Center, State Council, said, "Judging from the trend in the past months, I think the economy is stabilizing, and consolidating the foundation. In the process, we need to watch out of uncertain or unstable factors."

The analyst from the country's top think-tank also says the uncertainties mainly stem from demand. The sub-index for new orders fell 0.6 points, while new export orders swung to contraction. The government needs to keep up the pace of investment, and stimulate domestic demand

Zhang Liqun said, "We need to take more measures to enlarge consumption, especially in upgrading consumption, and support low and middle income earners. If we are able to stabilize domestic demand, we will be more prepared to weather external headwinds."

Industry insiders say corporate confidence in the manufacturing industry is still pessimistic.

Luo Jun, CEO of Asian Manufacturing Association, said, "Although China's economic growth has outperformed many countries, the confidence is still not upbeat. One reason is the concern about the global economy. Another worry is the structural problem of the economy. For example, the real estate industry makes very high profits, many manufacturers are turning to the real estate sector, and the government support for the manufacturing businesses is not enough."

The government has signalled it will step up infrastructure investment to offset global headwinds, but will not repeat the big stimulus seen during the global financial crisis.