China PMI steadies, but doesn’t dispel growth worries

Activity in China’s factories increased marginally in April but export orders fell sharply, a government survey showed on Thursday, adding to questions about whether the world’s second-largest economy is stabilizing after its first-quarter slowdown.

The data came a day after Premier Li Keqiang pledged to step up support for the trade sector, adding to measures taken over the past month on concerns that the economy may be losing momentum more quickly than expected.

The Purchasing Managers’ Index rose to 50.4 in April from March’s 50.3, the National Bureau of Statistics said, one of the first indicators of how the economy started the second quarter.

At just above the 50 level that separates growth from contraction, it indicated a slight pick-up in activity for the month, although it was a notch below economists’ expectations.

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China’s Leader Warns of Long-Term Terror Fight After Blast

President Xi Jinping of China said the government must prepare itself for a long-term fight against what he called separatist forces in the country’s restive Xinjiang region after assailants with knives and a bomb killed one person and injured at least 79 on Wednesday evening at a railway station in Urumqi, the regional capital.

At least two of the assailants, who attacked bystanders with knives before setting off an explosive device outside Urumqi’s South Station, were killed, bringing the death toll to three, the official People’s Daily reported. Photos released by the state news media showed charred baggage and debris outside an exit to the station.

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Junket Figure’s Disappearance Shakes Macau’s Gambling Industry

The disappearance of a Macau junket figure believed to owe up to 10 billion Hong Kong dollars ($1.3 billion) is roiling the world’s largest casino market and putting a spotlight on the opaque network of middle men who drive nearly two-thirds of the Chinese territory’s gambling revenue.

Unlike other gambling hubs like Las Vegas, Macau depends on junkets for many of its customers. These companies bring high-spending gamblers to the casinos from mainland China, issue them credit and collect players’ debts in exchange for commissions. The system took root there because the Chinese government imposes restrictions on how much cash its citizens can take out of the mainland and because gambling debts aren’t considered valid inside China.

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China-Russia to hold East China Sea naval drills

China and Russia will hold joint naval exercises in the East China Sea later this month, amid regional tensions over island groups and airspace.

A notice on the Chinese Defense Ministry’s website Thursday said the “Jointly At Sea 2014” drills would begin in late May near Shanghai.

It said the latest in a series of joint drills aimed to “deepen practical cooperation and boost their abilities to work together to respond to seaborne threats.”

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Japan to conduct island defense drill amid tension with China

Japan will conduct a military exercise this month to practice defending an island, the Defense Ministry said on Thursday, underscoring concern about East China Sea islands controlled by Japan but claimed by China.

The dispute over the islands, called the Senkaku in Japan and Diaoyu in China, has raised fears of a clash between the Asian neighbors which could even drag in the United States.

Separately, China said on Wednesday it would carry out naval exercises with Russia in the East China Sea in what it called a bid to deepen military cooperation.

Japan’s Defense Ministry said the island defense exercise would run from May 10 to May 27 on a small uninhabited island in the Ryukyu chain, some 600 km (375 miles) northeast of the disputed isles.

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China rejects sign it may soon be No. 1 economy

China has rejected a World Bank report that suggests it might pass the United States this year to become the biggest economy measured by its currency’s purchasing power.

China is on track to become the No. 1 economy by sheer size by the early 2020s and possibly sooner. But its leaders downplay such comparisons, possibly to avert pressure to take on financial obligations or make concessions on trade or climate change.

The estimate by the World Bank’s International Comparison Program says that based on 2011 prices, the purchasing power of China’s currency, the yuan, was much stronger than was reflected by exchange rates.

By that measure, China’s economy was 87 percent the size of the United States’ in 2011, or 15 percent bigger than the previous estimate, according to a calculation by RBS economist Louis Kuijs. Faster-growing China would pass the United States in purchasing power terms this year, though it still would be about 60 percent the size of the U.S. economy at market exchange rates.

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New military pact reflects cozier US-Philippine alliance amid jitters over China’s rise

A new defense pact that will allow thousands of U.S. troops to be temporarily based in Philippines for the first time in more than 20 years signals closer cooperation in the allies’ hot-and-cold relationship that has been shaped over the decades by war, terrorism and now, jitters over China’s rise.

The 10-year agreement, signed Monday as President Barack Obama arrived in Manila, was considered the centerpiece of his four-nation Asian trip, which Obama used to reassure allies like Japan and the Philippines of American military backing as they wrangle with China in increasingly tense territorial disputes.

Obama said the Enhanced Defense Cooperation Agreement showed that Manila and Washington have emerged from a rough period in their alliance.

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