A Reuters poll of 28 economists forecast the official purchasing managers’ index (PMI) would remain at 50.3 in December, matching November’s reading and staying above the 50-point threshold that separates growth from contraction in activity, reported Reuters on Dec 30.
China’s factory activity likely to expand for the third straight month in December, offering a wave of optimism for officials trying to steady the world’s second largest economy as they brace for further US trade tariffs under President-elect Donald Trump’s second term.
Analysts polled by Reuters also forecast the private sector Caixin PMI at 51.7.
Nevertheless, other Chinese sources put China’s non-manufacturing PMI at 52.2 in December, up from 50 in November, and manufacturing PMI at 50.1 in December, showing contraction from 50.3 recorded in November.
The World Bank last week raised its growth forecasts for China for 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the property sector, would weigh on economic growth next year.
Stabilising the property sector, which at its peak in 2021 accounted for around a quarter of the economy and where 70% of household savings are parked, is critical for Beijing to revive domestic consumption and improve sentiment among factory owners.
China’s leaders are hoping that economy-stimulating measures late this year will bolster the struggling property market, which has significantly affected domestic demand.
Government advisors recommend maintaining a growth target of around 5.0% next year for the US$19 trillion economy and ramping up consumer-centric stimulus. At an agenda-setting meeting earlier this month, Chinese policymakers pledged to increase budget deficit, issue more debt and loosen monetary policy to support economic growth.
This move could benefit manufacturers amid a global economic slowdown, reducing their exposure to US threat of additional tariffs on Chinese goods.
Trump has vowed to impose a 10% tariff on Chinese goods to compel Beijing to halt the trafficking of Chinese-made chemicals used in fentanyl production. He also threatened tariffs in excess of 60% on Chinese goods during his campaign, posing a major growth risk for the world’s top exporter.
