Infrastructure investment spending 'renewed' in China

Chinese domestic commodity prices are rising.

OCBC Treasury Research noted:

Official PMI remained unchanged at 50.6 in December, above 50 for the third consecutive month, confirming that the mild recovery in China is on track. New export orders fell slightly from 50.2 to 50 but new orders were unchanged at 51.2.

Employment increased from 48.7 to 49 despite still below 50. The expansion in manufacturing sector was mainly driven by big manufactures while the PMI for medium and small manufacturers remained below 50 at 49.9 and 48.1.

We agree the view that recent expansion partly reflected renewed infrastructure investment spending as evidenced by rising Chinese domestic commodity prices. Given the infrastructure spending is likely to continue in 2013, we think PMI from heavy industry and big manufactures may continue to expand at least for Q1.

Chinese market is closed today and tomorrow for holiday and will resume on Friday.