China's manufacturing sector returned to expansion in December for the first time since March, with the official Purchasing Managers Index rising to 50.1 and beating economist expectations. The reading above the 50-point threshold that separates expansion from contraction signals a potential stabilization of the world's second-largest economy after months of sluggish performance.
The improvement in manufacturing activity comes as Beijing's stimulus measures begin to take effect, providing support to an economy that has struggled with weak consumer demand, a prolonged property market crisis, and deflationary pressures throughout much of 2025. Government officials have implemented a series of policy measures aimed at reviving growth, including interest rate cuts and increased infrastructure spending.
New orders showed improvement in the latest survey, suggesting that both domestic and export demand may be recovering from recent lows. The export orders sub-index was particularly encouraging, indicating that Chinese manufacturers are seeing increased interest from international buyers despite ongoing trade tensions with Western economies.
The property sector, which has been a major drag on the Chinese economy, showed signs of stabilization in some regions, though significant challenges remain. Government efforts to support struggling developers and restore confidence in the housing market appear to be having a modest positive effect in certain markets.
Employment conditions in the manufacturing sector remained under pressure, with companies continuing to exercise caution in hiring despite the pickup in activity. Analysts note that sustained expansion in manufacturing will be necessary before employers commit to significant workforce increases.
The positive manufacturing data provides some relief to global investors who have been concerned about China's economic trajectory and its implications for global growth. China remains a critical driver of demand for commodities and a major market for multinational corporations.
Economists cautioned that one month of expansion does not constitute a definitive trend reversal, and that continued policy support will likely be necessary to sustain the recovery. The government has signaled its commitment to maintaining accommodative economic policies into 2026.
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