By Hasan Muhammad

Editor's Note: The writer is a freelance columnist on international affairs based in Karachi, Pakistan. The article reflects the author's opinions and not necessarily the views of China Economic Net.

China's manufacturing sector has exhibited notable resilience and adaptability, as evidenced by the latest data indicating modest expansion for the second consecutive month in March. The official Purchasing Managers' Index (PMI) for the manufacturing sector rose from 50.2 in February to 50.5 in March, marking its highest level in a year and remaining above the critical 50-point threshold that separates growth from contraction. Several factors have contributed to this positive trajectory.

The full resumption of work and production following the Spring Festival holiday has invigorated industrial activity. Additionally, strategic emerging sectors, particularly those involving advanced technologies like artificial intelligence, have shown increased prosperity. The rise of AI models such as DeepSeek exemplifies China's commitment to innovation-driven growth.

Continuous stimulus measures aimed at spurring consumption and investment have further bolstered market sentiment. The recently concluded "Two Sessions," China's annual meetings of its top legislative and political advisory bodies, have sent positive signals, reinforcing confidence in the nation's economic policies. Analysts suggest that these factors collectively indicate that the economy maintained a relatively strong momentum in the first quarter, with GDP growth expected to reach around 5 to 5.2 percent year-on-year.

Despite external challenges, such as tariff hikes imposed by the United States, China's policymakers are proactively implementing countercyclical adjustments to macroeconomic policies. Anticipation of reductions in interest rates and the reserve requirement ratio in the second quarter reflects a strategic approach to sustaining growth momentum and supporting long-term economic restructuring.

The non-manufacturing sector also mirrors this positive trend. The non-manufacturing PMI, encompassing services and construction activities, increased to 50.8 in March from 50.4 in February. The composite PMI, which covers both manufacturing and non-manufacturing sectors, rose to 51.4 in March from 51.1 in February, indicating broad-based economic expansion.

Fitch Ratings, in its latest report, has anticipated a shift in China's growth pattern this year, with domestic demand becoming the predominant driver. The impact of U.S. trade policies is expected to be mitigated by looser fiscal and monetary measures, alongside exchange-rate adjustments. Moreover, signs of stabilization in the property market suggest that the real estate sector may exert less drag on overall investment.

The Government Work Report for this year underscores a "more proactive fiscal policy," setting the annual projected fiscal deficit-to-GDP ratio at around 4 percent, up from 3 percent last year and the highest since records began in 2010. This robust fiscal stimulus is designed to offset headwinds and provide substantial support to the economy. The annual growth target of around 5 percent is both reasonable and practical, reflecting confidence in achieving sustainable development.

The latest factory activity data reflects China's robust economic fundamentals and its capacity to navigate external challenges. Through strategic policy measures and an unwavering commitment to innovation and domestic demand, China is well-positioned to sustain its growth momentum and achieve its economic objectives.