China's Manufacturing Resilience Continues: Reuters Poll Shows 3rd Month of Expansion
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China's manufacturing sector likely expanded for a third consecutive month in December, according to a Reuters poll of 28 economists. The official purchasing managers' index (PMI) is forecast to hold steady at 50.3, marking the third month above the 50-point threshold that indicates growth, as reported by Reuters.
The resilience of the manufacturing sector comes amidst a challenging global economic landscape and heightened uncertainty surrounding US trade policy under the incoming Trump administration. Beijing has implemented policy measures to support the struggling property market, a key driver of domestic demand, and to insulate manufacturers from potential US tariffs.
"China's leaders are hoping policy support measures late this year will bolster the struggling property market, which significantly impacts domestic demand," Reuters notes. "This move could benefit manufacturers amid a global economic slowdown, reducing their exposure to U.S. President-elect Donald Trump's threat of additional tariffs on Chinese goods."
However, recent mixed industrial output and retail sales data for November highlight the challenges in achieving a sustained economic recovery. Government advisors are recommending a growth target of around 5% for 2025 and increased consumer-focused stimulus.
Trump has threatened to impose tariffs on Chinese goods, citing concerns over fentanyl trafficking. These potential tariffs, coupled with his prior pronouncements of significant tariff hikes, pose a major risk to China's position as the world's leading goods exporter.
Beijing has pledged to increase the budget deficit, issue more debt, and loosen monetary policy to support economic growth. Despite this, the World Bank has warned that subdued household and business confidence, along with headwinds in the property sector, will weigh on economic growth in 2025.
The Reuters poll also forecasts the private sector Caixin PMI at 51.7, with the data due to be released on Thursday.