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China's factory activity expanded at its fastest pace in 18 months in July as new orders surged, a preliminary HSBC survey showed on Thursday, the latest indication that the economy is picking up as government stimulus measures kick in. The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index rose to 52.0 in July from June's final reading of 50.7, beating a forecast of 51.0 in a Reuters poll. "Economic activity continues to improve in July, suggesting that the cumulative impact of mini-stimulus measures introduced earlier is still filtering through," said Qu Hongbin, chief economist for China at HSBC. "We expect policy makers to maintain their accommodative stance over the next few months to consolidate the recovery." Mainland China stocks jumped after the PMI report while shares in the rest of Asia edged higher.
Former US Treasury Secretary Timothy Geithner defended the Federal Reserve's withdrawal of its unprecedented stimulus programme in an Australian newspaper interview Thursday, saying what was good for the American economy would also support other countries. Emerging market countries have complained about capital flight as the US central bank winds back its quantitative easing, which has pumped trillions of dollars of "cheap money" into financial markets over the past few years. "That is a world-class problem to have compared to what they faced over the last five years." The former public servant, who spent four years as treasury secretary in the aftermath of the global financial crisis, said his memoirs gave people "the chance to take a fresh look at the choices we made".