China factory activity suddenly expands in August

Activity in Chinese manufacturing sector gained suddenly in August, though revenues were moderate, as an official poll revealed on Tuesday, suggesting the world's number two economy is steadying, though still sluggish.

The better-than-expected reading might reinforce soaring views among traders that China's major bank will be in no hurry to drop interest rates or banks' reserve requirements any time soon, just for fear of contributing to high debt levels or driving asset bubbles.

This simply means leaving the Chinese economy more reliant on higher government spending, including infrastructure projects, spurring demand for materials from cement to steel and also easing strains on ailing heavy industries.

In August, the official Purchasing Managers' Index (PMI) edged up to 50.4, compared with the previous month's outcome of 49.9 and higher than the 50-point mark, separating growth from contraction on a monthly basis.

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