China's Factory Growth Stumbles as US Trade Fears Weigh
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China's factory activity expanded at a slower-than-anticipated pace in December, as overall sales were dampened by weakening export orders amid growing concerns about the trade outlook, as reported by the South China Morning Post, citing a private sector survey released Thursday.
The Caixin/S&P Global manufacturing purchasing managers' index (PMI) edged down to 50.5 in December, from 51.5 in November, missing analysts' forecasts of 51.7. This aligns with an official survey released earlier in the week showing modest expansion in manufacturing activity, underscoring the need for further stimulus to fuel growth in 2025.
The deceleration in output growth is attributed to a slowdown in new orders, with export orders contracting for the fourth time in five months. The report points to weak global economic conditions and the looming threat of new US tariffs as major risks for China, the world's leading exporter of goods. While there has been speculation that some exporters and US buyers might have accelerated shipments in anticipation of the tariffs, a recent report from China Beige Book suggests this preemptive surge is waning.
"The pulling forward of trade before anticipated 2025 tariffs has ended. The only rescue in on-year terms is if Trump’s China-tariff talk is hot air,” China Beige Book stated. The slower-than-expected growth in manufacturing activity, coupled with the decline in export orders, reinforces calls for increased government stimulus to support economic growth in 2025. The incoming Trump administration and its anticipated trade policies with China add a further layer of complexity to the economic outlook.