China’s manufacturing sector is experiencing a slowdown in production and operations. In December 2024, the Caixin China Manufacturing Purchasing Managers’ Index (PMI) recorded 50.5, a decrease of 1.0 percentage points from November and lower than Reuters’ expectation of 51.7.
According to a report on Caixin’s website on January 2, 2024, the Caixin China Manufacturing PMI for December was 50.5, down 1.0 percentage point from November, indicating a deceleration in the expansion pace.
On the day before New Year (December 31), the official data from the National Bureau of Statistics of China revealed that the December Manufacturing PMI was 50.1, a slight weakening from November’s 50.3.
Looking at the sub-indices of the Caixin China Manufacturing PMI for December, both supply and demand expansion in manufacturing slowed to varying degrees, with the Manufacturing Production Index and New Orders Index dropping to a three-month low. External demand failed to continue its recovery, as the new export order index in December returned to the contraction zone.
The report mentioned that sample companies reflected a sluggish external economic environment, unfavorable trade prospects, and a decrease in demand for Chinese manufactured products in overseas markets. The contraction in exports for the month was mainly centered on investment and intermediate goods categories, while export orders for consumer goods increased.
The employment index for manufacturing in December remained below the critical point. Companies reported increasing backlogs of work, but with the slowing growth in new orders, the corresponding index fell to near the boom-bust line in the expansion zone.
Wang Zhe, Senior Economist at the Caixin Think Tank, stated that in December 2024, there was an expansion in supply and demand in manufacturing, with companies increasing purchases and actively replenishing inventory. However, weak external demand, employment pressure, and subdued sales prices pose challenges. The sub-indices of the December Caixin China Manufacturing PMI have shown signs of weakening, and further observation is needed on the sustainability and effectiveness of previous policy stimulus effects. In 2025, the external environment is expected to become even more complex.