China manufacturing indicator weakens

BEIJING - Chinese manufacturing activity declined in December, adding to pressure on communist leaders who have promised sweeping reforms to revive the slowing economy.

An industry group, the China Federation of Logistics & Purchasing, said yesterday its purchasing managers index for December declined to 51 from the previous month's 51.4. The measure is a 100-point scale on which numbers above 50 indicate increasing activity.

"There still is downward pressure on economic growth," said economist Zhang Lijun in a statement that accompanied the report.

A Communist Party plan issued in November promised to revitalize the economy by injecting more competition into industries dominated by state-owned companies. This week, the ruling party announced the formation of a body led by President Xi Jinping to oversee regulatory changes.

Economic growth declined to a two-decade low of 7.5 percent in the three months ending in June. It rebounded to 7.8 percent the following quarter but private sector analysts say that recovery is likely to fade. The Cabinet said last week that for the full year, the economy probably grew 7.6 percent, which would be its weakest performance since 1999.

Chinese leaders are trying to reduce reliance on trade and investment by encouraging domestic consumption. But household spending is rising more slowly than planned, which has forced Beijing to prop up growth with spending on railway construction and other projects.

The logistics federation said the export component of its index declined 0.8 points to 49.8. Production expanded but the activity indicator weakened by 0.6 points to 52.

An unexpectedly sharp decline in global demand for Chinese exports in 2012 and early last year prompted Beijing to reverse course temporarily and launch a mini-stimulus of higher spending on railway construction.

The country's top economic official, Premier Li Keqiang, has warned that still more stimulus will have little effect and improvements will have to come from longer-term reforms.

The ruling party's reform blueprint last month promised China's more dynamic entrepreneurs a bigger role but said state industry would remain the core of the economy, a move some analysts warn could drag on growth.