ForexSpace.com - In stark contrast with this morning’s UK PMI data, official Chinese figures for April came in at 53.3, from 53.1 in March, stronger than broadly expected. Today's China data also conflicted with preliminary data released by HSBC last week that showed the Asian powerhouse's manufacturing activity shrank in April for the sixth straight month.

Most forex traders and top forex brokers line up beside the likes of Kathleen Brooks, Research Director at FOREX.com, who sees the China statistics bureau’s divergence from the HSBC version suggest a Chinese PMI actually remaining in contraction territory below 50. “Thus,” says Brooks, “the outlook for China is incredibly cloudy as these two signals are giving differing results. However, based on the official figure alone, this has expanded for five consecutive months and suggests that the economy may have bottomed in the first quarter of this year.”

China of course relies heavily on its manufacturing and export sector for growth, so fears have been growing of late that a slowdown in key markets such as the US and Europe might impact the Chinese economy. Dariusz Kowalczyk of Credit Agricole CIB explains his view of how the key message is that “Chinese manufacturing is growing, not as fast as in years past but faster than in the fourth quarter last year and enough to achieve the government's growth target for the year,"

Certainly, China has managed to avoid a hard landing, said IHS Global's Ren Xianfeng of the forex news, adding: “Whilst we shouldn’t expect a major property meltdown or construction bust, nor are we seeing any indication of a deflationary spiral or banking crunch.”

Instead, in order to stimulate lending in the country, China's central bank has cut the amount of money that banks need to hold in reserves twice in the past few months, a strategy which saw the country’s banks extend 1.01tn yuan  in new loans in March, much more than forecast. Analysts said the increased availability of credit had started to have a positive impact on the economy.

China's solid recent growth has given rise to increased domestic demand, none more so than in its housing sector, where prices have soared. There had been worries that, as growth slows, prices could fall sharply, hurting its economy. However, so far there have been no signs of that happening. Analysts said that given the steadiness of the property market, policymakers were likely to continue to ease their policies to boost growth.

In many respects, April's PMI offers a less muddled reading than last month’s, which was confused somewhat by poor seasonal adjustment surrounding the significant divergence between official and unofficial readings. Given that April usually gives the peak readings in a year, the small tick-up in today's forex news report seemed too modest to be cheerful. As Yao Wei at Societe Generale explains: "The headline figure, if fully seasonally adjusted, was lower than that in March in February but still higher than that in Q4 2011."

Nonetheless, there’s still no denying that Chinese policymakers continue to tread a fine line between trying to generate growth whilst avoiding price pressure increases and a strengthening currency.

Drew Hillier. Editor