China's manufacturing growth slowed in April

China's manufacturing growth slowed in April, suggesting that the government's tightening efforts had met with success in reining in manufacturing growth in the world's second-largest economy, a survey showed.

The official purchasing managers' index for China was down to 52.9 in April from 53.4 in March, below market forecasts of an increase to 54.0.

According analysts, the survey, designed to provide a snapshot of conditions in China's vast manufacturing sector, was largely in line with the purchasing manager's index. The HSBC-sponsored PMI reading, published on Friday, hit a seven-month low at 51.8 in April.

With inflation at the highest in nearly three years, China has taken a series of policy actions to gain control over prices, raising interest rates and drastically hiking banks' reserve requirements, cutting lendings by banks and speeding up the pace of currency appreciation.

The upshot, according to analysts, is that the steps have at least partially hit the mark. A sub-index that measures index prices was down to 66.2 in April, which was a seven-month low, from 68.3 in March.

However, the survey also uncovered worrying signs for the global economy, that has come to rely strongly on Chinese demand as a source of growth with the US, Europe and Japan still struggling to recover from the financial crisis.
 
According to analysts, overall, the PMI shows there was still a possibility that the Chinese economy may slow down, with falling demand growth leading to adjustments in inventories, increasing the possibility of slowing economic growth.
 
Meanwhile, the World Bank on Thursday said it was too early for China roll back its policy tightening even as it raised its year-average inflation forecast in a quarterly review of the economy.

According to market talk, price pressures have led to the belief that Beijing could let the yuan rise at a faster pace or even take more drastic action with a large revaluation of the currency.