China Factory Gauge Shows Robust Economy as Price Outlook Surges

China’s official factory gauge rebounded, suggesting the economy may remain robust enough to offer policy makers more room to continue curbing financial risks.

The unexpected jump, after an across-the-board cooling in July, highlighted stronger momentum on the factory floor as the government’s effort to curb overcapacity in industry pushed raw material prices higher. The challenge ahead for policy makers is to balance preserving the pace of growth with slowing the pace of credit expansion.