China factory activity grows, ending longest slump on record

BEIJING – China’s factory activity staged an unexpected recovery in December, snapping the longest slump on record and giving the economy a head-start into the new year.

The official manufacturing purchasing managers’ index (PMI) rose to 50.1 from 49.2 in November, ending an eight-month contraction streak. That pickup was confirmed by a separate private survey that also exceeded the 50-mark separating expansion and contraction. 

Both readings defied economists’ forecasts for continued weakness and suggest that the factory floor of the world’s second-largest economy is stabilising after a challenging year of weak domestic demand and trade headwinds.

“Production and demand have both expanded significantly,” Ms Huo Lihui, a statistician at the National Bureau of Statistics, said in a statement accompanying the release. 

China’s 30-year bond futures sank 0.7 per cent, while yields climbed in the cash market, as the better than expected economic data prompted investors to move away from haven assets.

Ms Huo highlighted that 16 of 21 surveyed industries showed improvement, with the PMI for high-tech manufacturing jumping to 52.5. Expectations for production and business activities surged to the highest since March 2024.

While factory activity returned to expansion, the broader data points to a fragile economic backdrop as 2025 draws to a close.

Investment lost further ground in November, consumer spending growth slowed sharply, industrial output undershot expectations and the property sector deteriorated, reflecting persistent weakness in domestic demand.

Even so, there has been little sign of major new policy support. With

China’s 2025 growth target

likely within reach, policymakers appear in no rush to roll out additional stimulus, and any new push may be deferred until early 2026.

President Xi Jinping has signalled a tolerance for slower growth in some regions and even said recently that China should crack down on “reckless” projects, highlighting his focus on the quality, rather than pace, of economic growth.

The official non-manufacturing index tracking construction and services rose more than forecast to 50.2 in December from 49.5 a month earlier, the statistics office said.

Separately, the RatingDog manufacturing PMI also showed factory activity unexpectedly climbed to 50.1 from 49.9 in November, matching the official gauge.

The two surveys cover different sample sizes, locations and business types, with the private poll focusing on smaller, export-oriented firms. BLOOMBERG