By Bloomberg News Dec. 1 (Bloomberg) -- China’s manufacturing grew last month at the fastest pace in five years, a survey showed, helping Asia to lead the recovery from the global economic slump. The purchasing managers’ index released today by HSBC Holdings Plc rose to a seasonally adjusted 55.7 from 55.4. The government’s PMI, also released today, held at an 18-month high. Australia’s central bank cited the speed of Asia’s recovery and the region’s good growth prospects next year in today’s unprecedented decision to raise interest rates for a third straight month. India beat forecasts yesterday with 7.9 percent economic growth in the third quarter and South Korea reported today that its exports gained for the first time in 13 months. “China’s recovery has been consolidated,” said Qu Hongbin, the chief China economist at HSBC in Hong Kong. “Rising new orders and production, plus the rapid expansion of new export orders, have and will generate new jobs.” Twelve-month non-deliverable yuan forwards were little changed at 6.6285 per dollar as of 12:38 p.m. in Shanghai. The Shanghai Composite Index fell 0.1 percent, trimming this year’s gain to 75.4 percent. The HSBC PMI rose to the highest level since the 57.1 reading in the survey’s first month in April 2004. HSBC’s report painted a brighter picture of export demand than the official survey. The PMIs have different methodologies. Money Flows to Asia Australian central bank Governor Glenn Stevens said today that capital flows into Asia and other emerging markets have been picking up and, in contrast with the rest of the world, the region’s financial sectors are not “impaired.” China and India are the fastest-growing of the world’s major economies. In China, gross domestic product will expand 10.5 percent this quarter, helping the government to top its 8 percent target for the year, according to the median estimate of 38 economists. The nation’s growth fuels demand for Australian resources such as iron ore. The Communist Party’s Politburo pledged last week to stick next year with a “moderately loose” monetary policy. Premier Wen Jiabao rebuffed yesterday calls by European leaders for China to let its currency strengthen, saying that a stable yuan helped global financial stability. The nation has effectively pegged the yuan to the U.S. currency since July last year to shield exporters from slumping global demand. Emergency Meeting The stability of China’s currency against the dollar contrasts with gains this year by the yen and the euro that have hurt exporters in Japan and the euro region. Japan’s central bank announced an emergency policy meeting today, spurring speculation it will seek to limit the currency’s gains. Eisuke Sakakibara, formerly Japan’s top currency official, today said the yen may rise beyond 80 per dollar by March, approaching its 1995 record, and any attempts to halt its advance through intervention will fail. In China, growth is stabilizing and becoming more sustainable, and government investment, which is driving the recovery, will gradually be reduced, Zhang Liqun, a researcher at the State Council Development and Research Center, said in the statement with the government’s PMI. The “velocity of the recovery in China has indeed been surprising,” Marius Klopper, the chief executive of BHP Billiton Ltd., the world’s largest mining company, said Nov. 26. “Chinese growth will continue and will continue to be resources-intensive.” Signs of Weakness? Still, some economists saw signs of weakness in the government’s PMI, as indexes of orders, including for exports, slipped even as a measure of output rose. “Instead of everything being positive we begin to see things being a little bit mixed,” said Kevin Lai, an economist at Daiwa Institute of Research in Hong Kong. “Global demand is getting a little bit soft again.” Both PMIs showed input prices climbing, signaling inflation pressures. Overall, the government PMI was unchanged at a seasonally adjusted 55.2, the Federation of Logistics and Purchasing said. That was less than the median estimate of 55.7 in a Bloomberg News survey of 17 economists. The government is on alert for inflation and asset bubbles after an unprecedented $1.3 trillion of new loans in the first 10 months of 2009 drove a rebound from the nation’s weakest growth in almost a decade. “The recovery is quite strong with all economic indicators except exports now pretty much back to pre-crisis levels,” said Isaac Meng, a senior economist at BNP Paribas SA in Beijing. “The key challenge is how to cool off excessive liquidity and pre-empt the asset bubble and inflation risks.” For Related News and Information: Most-read stories on China: MNI CHINA 1W Most-read China economy stories: TNI CHECO MOSTREAD BN For top economic news: TOP ECO For top China news: TOP CHINA Credit crunch page: WCC Government relief programs: GGRP

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