China's factory activity expands, ending longest slump on record
What's the story
China's factory activity has shown an unexpected recovery in December, ending an eight-month contraction streak—the longest on record. The official manufacturing purchasing managers' index rose to 50.1 from last month's 49.2, data released by the National Bureau of Statistics on Wednesday showed. This defied economists' predictions of continued weakness and surpassed the 50-mark that separates expansion from contraction. The official non-manufacturing index, which tracks construction and services, also rose more than expected to 50.2 in December from last month's 49.5.
Economic outlook
Broader economic indicators suggest fragility
Despite the positive factory activity, broader indicators point to a fragile economic environment as 2025 comes to an end. Investment continued its decline in November, consumer spending growth sharply slowed down, industrial output missed expectations, and the property sector worsened. These trends highlight persistent weakness in domestic demand.
Policy stance
Policy support remains elusive amid growth target
Despite the economic challenges, there are no signs of new policy support. With China's 2025 growth target likely within reach, policymakers don't seem to be in a hurry to introduce more stimulus measures. President Xi Jinping has even indicated a tolerance for slower growth in some regions and emphasized on curbing "reckless" projects.