On August 31, 2024, a worker welded at an agricultural machinery manufacturing enterprise in Qingzhou Economic Development Zone, China.
Cost Photo | Noor Photo | Getty Images
China’s factory activity rose less than analysts expected in December on Tuesday, suggesting Beijing’s stimulus measures are not enough to effectively boost the country’s struggling economy.
The country’s official purchasing managers’ index for December The data released by the Bureau of Statistics was 50.1 National Bureau of Statistics data show.
The reading was below Reuters’ forecast of 50.3. Manufacturing activity in November and October were 50.3 and 50.1 respectively. A PMI reading above 50 indicates expansion in economic activity, while a reading below 50 indicates contraction.
According to the National Bureau of Statistics, production and new orders increased in agricultural and sideline food processing, general equipment, food and beverage and other industries.
China’s non-manufacturing PMI, which measures activity in services and construction, rose to 52.2 in December from 50.0 the previous month.
Activity in 17 of the 21 industries surveyed was higher than last month, including aviation, transportation and telecommunications. The construction industry also resumed expansion, driven by the upcoming Spring Festival holiday.
Tommy Xie, head of Asia macro research at OCBC Bank, said: “I think one of the reasons for the sharp fluctuations in the non-manufacturing PMI last month was the sharp decline in the construction PMI.”
Investors will also be watching the Caixin/S&P Global Manufacturing Purchasing Managers Index, due for release on Thursday.
“For the Chinese economy, 2024 will be remembered as the year of muddling through,” said Larry Hu, chief China economist at Macquarie Group.
“Deflationary pressures persist as policy stimulus is only sufficient to achieve the GDP target but is far from sufficient to reflate the economy,” he added.
Since late September, China’s economy has seen a certain degree of recovery following the introduction of a series of stimulus measures.
“Overall, we still see the recovery (in China) continuing,” Xie said. “China will achieve its growth target of around 5% this year, maybe around 4.9%. So we expect a slight recovery in 2024,” he added.
this The World Bank raised its economic growth forecast for China on Thursday 2024 and 2025, reflecting recent policy adjustments. China’s GDP is now expected to grow by 4.9% in 2024, compared with the previous forecast of 4.8% in 2025.
However, other recent economic data from China suggest that the world’s second-largest economy remains in the throes of deflation, driven largely by tepid consumer demand and a prolonged slump in the housing market.
Chinese consumer inflation fell to its lowest level in five months in November, while the country’s import and export data were worse than expected. Additionally, the latest retail sales data disappointed, falling short of Reuters forecasts.
China’s industrial profits fell for the fourth consecutive month, falling 7.3% year-on-year in November.
last week, China’s Ministry of Finance announced Next year, fiscal support will be strengthened to promote consumption by expanding the trade-in of old consumer goods and increasing residents’ pensions and medical insurance subsidies.
According to Reuters, Chinese authorities have also decided to issue 3 trillion yuan ($411 billion) of special government bonds next year – the largest amount ever – to increase fiscal stimulus.
After Trump enters the White House, China will face greater challenges. Trump’s threat to impose higher tariffs on Chinese goods could further weaken China’s export sector, which is already grappling with increased trade barriers from the European Union.
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