China factory activity decline deepens in December

Beijing – China’s factory activity decline deepened in December, official data showed Sunday, as Beijing rounded off a year marked by its stuttering economic recovery from the pandemic.

The official manufacturing purchasing managers’ index (PMI) – a key measure of factory output – stood at 49 in December, below the 50-point mark separating expansion from contraction, according to the National Bureau of Statistics (NBS).

The reading signaled a further slump from November’s figure of 49.4 and represented the third straight month of contraction.

“In December... the level of vitality in the manufacturing sector somewhat declined,” the NBS said in an official readout.

China began dismantling its tight COVID restrictions in December 2022 after almost three years, allowing the economy to rebound.

But the recovery has stumbled amid weak consumer and business confidence, an entrenched housing crisis and record youth unemployment, while a global slowdown has weighed on demand for Chinese goods.

In recent months, Beijing has announced a slew of targeted measures as well as a sizeable issuance of sovereign bonds to boost infrastructure spending and rev up economic activity.

But the results so far have been mixed, with the PMI only edging into positive territory once in the past nine months.

There have been some signs of life, with the world’s second-largest economy growing at a better-than-expected 4.9 percent in the third quarter.

But Beijing still faces a tough task to achieve its stated annual growth target of around five percent, itself the lowest such aim in years.

Meanwhile, President Xi Jinping said Sunday the Chinese economy had grown “more resilient and dynamic” in 2023, despite financial figures continuing to disappoint as the post-COVID recovery stalls.

He also promised in a bullish New Year’s address to the nation that China would “surely be reunified” – a reference to the self-ruled island of Taiwan, which Beijing claims as its own and has pledged to seize.

Xi has endured a challenging 2023 at the helm of the world’s second-largest economy, with his administration struggling to sustain an economic rebound since rapidly dumping its onerous zero-Covid policy a year ago.

But Xi said on state broadcaster CCTV the economy had “weathered the storm” and become “more resilient and dynamic than before”, hailing the promotion of “high-quality development” and emerging industries such as electric vehicles, lithium batteries and solar panels.

He said next year “we must... consolidate and enhance the positive trend of economic recovery, and achieve long-term economic stability”.

Yet he also acknowledged some hardship, saying “some companies are facing operating pressure (and) some people are encountering difficulties in employment and living conditions”.

“All of these things concern me greatly,” he said.

“Our goal is both ambitious and yet very simple. In the end, it is to help people live better lives.”

Record youth unemployment and a persistent debt crisis in the crucial property sector have hemmed in China’s growth this year.

Official figures released on Sunday showed a decline in nationwide factory activity deepened in December, the third straight month of contraction.

Analysts have said Beijing may struggle to achieve its stated annual growth target of around five percent, the lowest such ambition in years.

Xi briefly mentioned Taiwan, weeks before the democratic island heads to the polls on Jan. 13.

Beijing has escalated its pressure campaign against Taiwan this year and tensions are high, with independence-leaning candidate Lai Ching-te leading opinion polls.

Xi declared in his Sunday speech “the motherland will surely be reunified”.

“Compatriots on both sides of the (Taiwan) Strait should be bound by a common sense of purpose to share in the glory of national rejuvenation,” he said.