China’s Factory Activity Returns to Growth in December as Orders Rebound

China’s factory activity edged back into expansion territory in December, offering a modest sign of stabilization in the world’s second-largest economy. The official manufacturing purchasing managers’ index (PMI) rose to 50.1, just above the expansion threshold, according to data released by National Bureau of Statistics. A separate private-sector survey also registered 50.1, confirming the improvement.

The better-than-expected readings reflected stronger orders as manufacturers ramped up production ahead of the New Year holiday period, with the Lunar New Year falling in mid-February this year. Easing pressure from an extended truce in U.S.-China trade tensions also provided some relief.

High-tech manufacturing stood out as a key driver. The official PMI for the sector climbed to 52.5, up 2.4 percentage points from November, while equipment manufacturing and consumer goods both reached 50.4. Food, textiles, clothing and electronics all posted relatively strong readings above 53, signaling broad-based short-term momentum.

However, the recovery remains uneven. A separate report from RatingDog noted that while overall orders improved, new export orders dipped slightly and hiring weakened. Small and mid-sized manufacturers — which employ the bulk of China’s workforce — stayed in contraction, and conditions for retailers and restaurants deteriorated as consumer spending softened.

Cost pressures also resurfaced. Rising raw material prices, particularly for metals, squeezed profit margins, prompting exporters to raise prices for the first time in three months, RatingDog said.

Economists warned the upturn may prove temporary. Capital Economics said the improvement was partly supported by increased government spending, while deeper challenges — including the prolonged property downturn and industrial overcapacity — are likely to persist into 2026, limiting the scope for sustained growth without stronger stimulus.

Overall, December’s data point to a short-term rebound rather than a decisive turnaround, with China’s manufacturing outlook still shaped by structural headwinds despite signs of near-term resilience.