Growth in factory activity in China is slowing, according to the Caixin PMI according to Reuters
BEIJING (Reuters) – China’s factory activity rose in December, but more slowly than expected, as overall sales weakened on a drop in export orders amid concerns about the trade outlook, a private sector survey showed on Thursday.
The data echoed an official survey on Tuesday that showed manufacturing activity rose modestly, boosting calls for more stimulus to boost growth this year as Donald Trump takes office soon and is likely to heighten trade tensions between the US and China.
The Caixin/S&P Global manufacturing PMI fell to 50.5 in December from 51.5 the previous month, beating analysts’ forecasts in a Reuters poll of 51.7.
The rate of output growth fell to a three-month low as new order growth slowed.
In particular, new export orders returned to contractionary territory, marking the fourth month of decline in the last five months. Subdued external economic conditions and threats of new US tariffs pose major risks for the world’s largest exporter of goods.
While some Chinese exporters and their US buyers may have recently increased shipments in anticipation of Trump’s tariffs, a report published by the China Beige Book suggests that last-minute pressure may be faltering.
“The trade pullback ahead of the projected 2025 tariffs is over. The only salvation from a year out is if Trump’s China tariff talks are hot,” the China Beige Book said.
Since Beijing introduced a series of policy support measures at the end of last year, economic activity has stabilized in some sectors. Markets are watching Beijing’s next policy moves, as policymakers consider reviving domestic demand a priority.
Chinese manufacturers maintained an optimistic view of output in 2025, although the degree of optimism fell to the lowest level since September. Their concerns about the outlook for growth and trade, especially amid threats of US tariffs, have cast doubt on hopes for sales growth this year driven by new products and policy.
Purchase inventory growth slowed, and post-production inventories accumulated in December.
The number of employees decreased for the fourth month in a row, but the rate of layoffs was lower than in November.
Average selling prices fell for the first time since September, in contrast to a renewed increase in input prices.
Respondents said they absorbed the cost increase and further reduced selling prices to support sales. Export fees also fell.
“The external environment is expected to be more complex this year, requiring early policy preparation and immediate response,” said Wang Zhe, an economist at Caixin Insight Group, calling for official efforts to boost household incomes and improve people’s living conditions.
Policymakers have pledged to increase pensions and expand the consumer goods replacement scheme in 2025, adding that they will work to boost household incomes and “strongly increase consumption”.
