China’s Manufacturing Sector Expansion Slowdown

China’s manufacturing sector expanded in December but at a slower-than-expected pace, marking its third consecutive month of growth, supported by new stimulus measures.

Key Manufacturing Index Data

The Manufacturing PMI was recorded at 50.1 in December, according to the National Bureau of Statistics. This reading is below the 50.3 of the previous month and the forecasted 50.3 average.

A PMI reading above 50 indicates expansion, showcasing that Chinese manufacturing activity has been on the rise for three straight months. Most major indexes contributing to the Manufacturing PMI stayed above the critical point, indicating sustained production activity within manufacturing enterprises.

Government Measures and Economic Impact

China’s government is committed to adopting more proactive fiscal stimulus and moderately looser monetary policies as indicated during a recent Politburo meeting, with plans set for 2025.

Meanwhile, U.S. President-elect Donald Trump has signaled intentions to impose steep import tariffs beginning January 20, which may add economic pressure on China. In anticipation of this, Beijing is expected to initiate more targeted fiscal stimulus in the upcoming year to bolster economic growth.

Broader Economic Indicators

Strong consumption in China is not limited to the manufacturing sector alone. The non-manufacturing PMI rose to 52.2 in July, surpassing expectations of 50.2 and exceeding December’s previous reading of 50.0.

Consequently, China’s composite PMI increased to 52.2 in December from 50.8 the prior month.

Furthermore, China’s GDP growth for 2024 is projected at 4.9%, within the target range of 4.5-5%. Reports indicate that the government is aiming for 5% GDP growth in 2025.