As China’s factory activity keeps expanding, manufacturing still faces ‘inadequate demand’

A major gauge of China’s factory activity has stayed in expansionary territory for three months in a row, adding momentum to the country’s economic recovery as the external environment is poised to become more fraught in 2025.

The official manufacturing purchasing managers’ index (PMI) – an indicator of sentiment among factory owners – fell to 50.1 in December compared with 50.3 a month earlier, according to data released by the National Bureau of Statistics (NBS) on Tuesday.

The index has stayed above the 50-point threshold since October, signaling expanding economic activity.

A PMI reading above 50 indicates expansion in the manufacturing sector, while a reading below 50 signals contraction.

Within the manufacturing PMI, the subindex for new export orders rose to 48.3 in December, compared with 48.1 in November.

Meanwhile, China’s non-manufacturing PMI – which tracks activity in the service and construction sectors – expanded to 52.2 in December after a neutral reading of 50 was reported the previous month.

Breaking it down, the construction sector subindex inched up to 53.2 in December, an increase from 49.7 in November. The service sector subindex, meanwhile, rose to 52 from 50.1.