Manufacturing rebounds in December

China's manufacturing sector saw a notable rebound in December, with demand recovering and exports stabilizing, as the purchasing managers' index climbed back above the 50-point mark for the first time since April.

Data released by the National Bureau of Statistics on Wednesday showed that China's official PMI rose to 50.1 in December from 49.2 in November, returning to expansion territory above the 50-point mark that separates expansion from contraction.

The subindex for production stood at 51.7 in December, up from 50 in November, while the gauge for new orders came in at 50.8, up 1.6 percentage points from the previous month, the NBS reported.

Experts said the sentiment in China's manufacturing sector has improved, with both demand and supply picking up, buoyed by optimism following the recently concluded annual Central Economic Work Conference, which underscored that China will continue to pursue a more proactive fiscal policy in 2026.

Lou Feipeng, a researcher at the Postal Savings Bank of China, attributed the rebound in manufacturing PMI to the emerging effects of pro-growth policies, including the rolling out of policy-based financial instruments and the accelerated issuance of special-purpose bonds, improved coordination between supply and demand, and significantly strengthened business confidence.

Data from the NBS also showed that PMI readings across major industries have all improved from November. High-tech manufacturing, in particular, posted a PMI of 52.5, up 2.4 percentage points from the previous month.

"The rapid growth of high-tech manufacturing has also contributed to an overall improvement in manufacturing activity, with the role of industrial upgrading and innovation-driven development becoming increasingly evident," said Zhu Keli, founding director of the China Institute of New Economy.

Wen Tao, an analyst at the China Logistics Information Center, said steadier export performance has also been a key factor underpinning the pickup in demand.

"With China-US economic and trade consultations continuing to make progress, manufacturing exports remained stable in December, and the new export orders index rose 1.4 percentage points from the previous month to 49." Wen added.

Wang Qing, chief macroeconomic analyst at the Golden Credit Rating International, shared this optimism. "Looking ahead, pro-growth policies are expected to continue underpinning manufacturing activity, and the manufacturing PMI is likely to stay in expansion territory in January 2026," Wang said.

NBS data also showed that China's non-manufacturing PMI, which includes subindexes for activity in the services and construction sectors, stood at 50.2 in December. The services PMI came in at 49.7, edging up 0.2 percentage points month-on-month but remaining below the 50-point threshold for a second consecutive month.

Wang said the services PMI remaining in contraction territory might be related to adjustments in the real estate market in the fourth quarter, which also suggests that consumer demand remains relatively weak.