Growth in China’s factory activity slows, Caixin PMI shows Via Reuters

BEIJING (Reuters) – China’s factory activity grew in December but at a slower pace than expected, as overall sales were dampened by a drop in foreign orders amid of concerns about the business outlook, a private sector survey showed on Thursday.

The data echoes an official survey on Tuesday showing manufacturing activity expanded modestly, fueling calls for more stimulus to spur growth this year as Donald Trump takes office soon and is likely to exacerbate US-China trade tensions.

The Caixin/S&P Global manufacturing PMI fell to 50.5 in December from 51.5 the previous month, beating analysts’ estimates in a Reuters poll of 51.7.

The rate of production expansion fell to a three-month low as growth in new orders slowed.

New shipment orders, in particular, are back in the doldrums, marking the fourth month of decline in the past five months. Deteriorating economic conditions and threats of new US tariffs pose significant risks to the world’s top exporter of goods.

While some Chinese exporters and their US customers may increase shipments soon in anticipation of Trump’s tariffs, a report published by the China Beige Book suggested that last-minute activity may slow.

“Pulling forward in trade before the expected 2025 tariffs are over. The only salvation in the season is if Trump’s speech of Chinese tariffs is hot air,” China Beige Book said.

Since Beijing introduced a series of policy support measures late last year, some sectors have seen economic activity stabilize. Markets are eyeing Beijing’s next policy moves, as policymakers make stimulating domestic demand a priority.

Chinese manufacturers remained optimistic about output in 2025 even though the level of confidence has dipped since September. Their concerns about growth prospects and trade, especially amid threats of US tariffs, are challenging new product sales growth prospects and strategy this year.

The increase in inventory slowed down and the latest manufacturing inventory was collected in December.

The employment rate fell for the fourth consecutive month, but the unemployment rate was lower than in November.

Average retail prices fell for the first time since September, despite some increases in import prices.

Respondents said they accepted cost increases and lowered sales prices to support sales. Shipping rates have also dropped.

“The external environment is expected to be more complex this year, which requires early policy adjustment and quick response,” said Wang Zhe, an economist at Caixin Insight Group, calling for official efforts to increase household income and improving people’s livelihoods.

Policy makers have vowed to increase pensions and expand the consumer spending plan by 2025, adding that they will work to increase household incomes and “strongly boost consumption”.