April 2 (Bloomberg) -- China’s manufacturing expanded for the first time in six months, spurred by the government’s 4 trillion yuan ($585 billion) stimulus package.

The Purchasing Manager’s Index rose to a seasonally adjusted 52.4 in March from 49 in February, the Federation of Logistics and Purchasing said today in Beijing in an e-mailed statement. A reading above 50 indicates an expansion.

The expansion may help President Hu Jintao achieve his target of 8 percent economic growth for the world’s third- biggest economy. The report comes as he attends a Group of 20 summit in London where world leaders are discussing remedies for the worst global recession since World War II. Hu’s stimulus package already triggered jumps in urban investment and loan growth in the first two months of this year.

“China will see a solid economic recovery from March as the impact of the stimulus package becomes larger over time,” said Sun Mingchun, an economist at Nomura Securities in Hong Kong. The economy may expand as much as 10 percent in the fourth quarter of this year, he said.

China’s stocks rose to a seven-month high today on speculation banks and companies will increase their earnings in the second quarter as economic growth responds to the stimulus. The Shanghai Composite Index rose 17.27, or 0.7 percent, to 2,425.29 at the close of trading.

Power Generation

Huaneng Power International Inc., China’s biggest electricity generator, plans to boost capital spending by 18 percent this year to expand capacity as the government’s economic stimulus measures spur demand for power, Zhou Hui, the company’s chief accountant, told reporters in Hong Kong today. The generator may post a profit this quarter, after recording its first annual loss last year, the China Securities Journal reported today, citing the company.

Qingdao port, the nation’s third-largest container port, saw throughput jumped 4.5 percent in the first quarter over a year earlier, according to state media report today.

China’s economy is responding to the government’s stimulus plan with investment spending this year “exceeding all expectations,” the Asian Development Bank said in a report this week. Buoyant private consumption and investment, and a pick up in credit growth, is helping domestic demand offset the impact of China’s collapsing exports, the Organization for Economic Cooperation and Development said this week.

Urban fixed-asset investment jumped an unexpected 26.5 percent in the first two months from a year earlier, new bank lending quadrupled in February and vehicle sales rose 25 percent the same month.

8% Growth

Ha Jiming, chief economist at China International Capital Corp. in Hong Kong, today raised his forecast for China’s growth this year to as much as 8 percent from a previous estimate of 7.3 percent, citing strong loan growth that has beaten expectations and recovery in “leading indicators” such as power output, new project investment and car sales.

The output index jumped to 56.9 from 51.2 in February, the new order index climbed to 54.6 from 50.4, and the new export order index rose to 47.5 from 43.4, according to today’s report.

Nine of the 11 sub-indexes from which the PMI is compiled climbed in March, while a produced-good inventory index dropped to 46.7 from 47.7 in February, indicating the progress of manufacturers running down stockpiles, today’s report showed.

To contact the reporter on this story: Yanping Li in Beijing at yli16@bloomberg.net

Last Updated: April 2, 2009 09:03 EDT