China Factory Activity Picks  12/31 06:28

   Chinese factory activity expanded for the first time in eight months in 
December, as orders picked up ahead of holidays and builders rushed to finish 
projects, according to surveys released Wednesday.

   BANGKOK (AP) -- Chinese factory activity expanded for the first time in 
eight months in December, as orders picked up ahead of holidays and builders 
rushed to finish projects, according to surveys released Wednesday.

   The official purchasing managers index for manufacturing, a monthly survey 
of companies, rose to 50.1 this month, the National Bureau of Statistics 
reported. That was just above the 50 cut off for expansion versus contraction 
on a scale up to 100. Another, private sector, survey also was at 50.1 for 
December.

   The better-than-expected readings partly reflect easing pressure due to an 
extended truce in trade tensions with the U.S. They also suggest manufacturers 
ramped up production ahead of New Year holidays, when many companies close for 
days. China's Lunar New Year falls in mid-February this year.

   In comments to a new year's gathering carried Wednesday by China's state 
media, President Xi Jinping, vowed to promote "high-quality development" and to 
carry out "more positive macroeconomic policies" while ensuring social harmony 
and stability.

   The world's second largest economy is forecast to grow at a pace just below 
the official target of about 5% this year, supported by strong activity in 
high-tech industries and exports. The official PMI for high-tech manufacturing 
stood at 52.5 in December, up 2.4 percentage points from the previous month.

   The report said the PMIs for both equipment manufacturing and the consumer 
goods industry reached 50.4.

   The separate report by RatingDog, a Chinese credit research and analysis 
company based in the southern city of Shenzhen, said that despite an increase 
in overall orders, new export sales fell slightly and hiring weakened.

   "Overall, the manufacturing sector regained growth at the end of 2025," 
RatingDog's founder Yao Yu said in a statement. "However, the improvement was 
marginal, with the impact of promotions and new products appearing 
impulse-driven and their sustainability requiring observation."

   The National Statistic Bureau said the PMI measures for food, textiles, 
clothing and electronics were above a relatively strong 53.

   However, while large manufacturers increased their output, factory activity 
for the small and mid-sized enterprises that account for the lion's share of 
employment in China remained in contractionary territory. As consumers cut back 
on spending, conditions for retailers and restaurants also deteriorated, the 
report said.

   Some economists believe China's economy is growing more slowly than official 
figures suggest. Its leaders are grappling with long-term challenges including 
a yearslong slump in the country's property sector and excess capacity in many 
industries, including automaking, that has led to damaging price wars.

   Higher costs for raw materials, especially for metals, has put pressure on 
company profit margins, the RatingDog report said. It noted that exporters had 
raised prices for the first time in three months to help offset those higher 
costs.

   The upturn in activity may be short-lived as it appears to be helped by a 
slight increase in government spending, Julian Evans-Pritchard of Capital 
Economics said in a report.

   "The big picture is that the structural headwinds from the property downturn 
and industrial overcapacity are set to persist in 2026 and there appears to be 
limited appetite among policymakers for a big increase in demand-side 
stimulus," he said.