Manufacturing growth for third consecutive month but at slow pace

According to an official survey released on Tuesday, China's manufacturing activity grew for the third consecutive month, but at a slow pace.

China's manufacturing activity grew for the third consecutive month (October, November, December), but at a slow pace, according to an official survey released on Tuesday. This suggests that policy stimulus measures may need more time to take effect amid emerging trade risks.

Workers labor on the production line at the Midnight Charm Garment lingerie factory in Guanyun, Lianyungang, Jiangsu Province, China, on November 25, 2024 - Source: Reuters

According to a Reuters poll, China's National Bureau of Statistics' Purchasing Managers' Index (PMI) fell from 50.3 in November to 50.1 in December, but remained above the 50 threshold and lower than the average forecast of 50.3.

China's $19 trillion economy has struggled to recover from the Covid-19 pandemic due to weak consumption and investment. However, policymakers expect that fiscal and monetary measures announced later this year will boost the recovery of the real estate market, which has been undermining the economy.

Improved domestic demand could benefit manufacturers amid a global economic downturn, mitigating the impact of new tariffs proposed by US President-elect Donald Trump on Chinese goods.

Mixed data on industrial production and retail sales for November, to be released in early December 2024, highlights the challenges China will face in fostering a sustainable economic recovery as it heads into 2025. Government advisors are recommending maintaining a growth target of around 5.0% for 2025 and strengthening stimulus measures focused on consumption.

The non-manufacturing PMI, which includes the construction and services sectors, rose to 52.2 in December, after falling to 50.0 in November.

President-elect Donald Trump has pledged to impose a 10% tariff on Chinese goods to force the country to stop smuggling chemicals used in the production of fentanyl from China. During his campaign, Donald Trump also said he might impose tariffs exceeding 60% on Chinese goods, posing a significant risk to the growth of the world's largest exporter of goods.

In a policy orientation meeting earlier this month, policymakers pledged to increase the budget deficit, issue more debt, and ease monetary policy to support economic growth.

Last week, the World Bank raised its growth forecast for China in 2024 and 2025, but warned that declining household and business confidence, along with difficulties in the real estate sector, will slow economic growth next year.

Stabilizing the real estate sector – which accounted for about a quarter of the economy at its peak in 2021 and where 70% of household savings are held – is key to China's recovery of domestic consumption and improvement of factory owner sentiment.

Data to be released on Thursday from analysts polled by Reuters forecasts the Caixin PMI (a composite economic index reflecting business activity in the private sector manufacturing sector) to reach 51.7.

According to Reuters, the Purchasing Managers' Index (PMI) of China's National Bureau of Statistics fell from 50.3 in November to 50.1 in December, but remained above the 50 threshold and lower than the average forecast of 50.3.

Source: https://congthuong.vn/trung-quoc-san-xuat-tang-truong-thang-thu-3-lien-tiep-nhung-toc-do-cham-367216.html