Home ›› 01 Jan 2022 ›› World Biz
China’s factory activity unexpectedly accelerated in December, but only by a slim margin, an official survey on Friday showed, with analysts foreseeing more economic headwinds in the near term and policymakers being pressured to offer support measures.
The official manufacturing Purchasing Managers’ Index (PMI) rose to 50.3 from 50.1 in November, data from the National Bureau of Statistics (NBS) showed.
Analysts had expected it to fall slightly to the 50-point mark, which separates growth from contraction.
The world’s second-largest economy has lost steam since the early summer after rebounding from last year’s pandemic slump, weighed down by a slowing manufacturing sector, debt problems in the property market, carbon emissions-related curbs, and small-scale Covid-19 outbreaks.
Next year, China will face “unprecedented” difficulty in stabilising trade, Vice Commerce Minister Ren Hongbin warned on Thursday, as production capacity in other exporting countries recovers from COVID-induced shocks and competes with Chinese exports.
“Looking to January, we expect the manufacturing PMI to fall to 50.0, weighed on by the stricter-than-usual anti-pollution measures to ensure blue skies for the upcoming Winter Olympics that will start in early February and contracting demand as result of the property downturn and slowing export growth,” Nomura economists wrote in a note.
Data from the statistics bureau showed a sub-index for new orders improved slightly in December but remained in contraction, at 49.7 versus 49.4 in November.
New export orders shrank further, with the sub-index coming in at 48.1 compared with 48.5 a month earlier, indicating fragile overseas demand.
A sub-index for production remained in positive territory at 51.4, but was lower than November’s 52.0.
“Compared with previous cycles, we believe the pain threshold is higher, as Beijing has given more weight to long-term targets than to short-term growth stability,” Nomura said.
“Still, there is a limit to how much they will allow growth to slow, and this limit could be seriously tested in the spring of 2022.”
