BEIJING, Dec 30 (Reuters) – China’s factory activity likely shrank for a ninth month in December, as policymakers grapple with lagging domestic demand and sliding factory profits along with volatile trade relations with key export markets.
The official purchasing managers’ index (PMI), a sentiment-based survey, is expected to remain at 49.2 in December, unchanged from the previous month and below the 50-point threshold that separates growth from contraction, according to 20 economists polled by Reuters. The data is due on Wednesday.
Chinese manufacturers have struggled to fully recover from the pandemic and were further dragged down by high tariffs from the U.S., the world’s top consumer market, even as they seek to diversify.
A global slowdown has also hit factories in the world’s second-largest economy particularly hard, as Beijing struggles to transform and rebalance the country’s production-driven and export-oriented economy.
Industrial firms’ profits tumbled at their fastest pace in over a year in November, separate data showed on Saturday, falling 13.1% year-on-year as broader economic activity also cooled.
Amid a volatile global backdrop and continued industry shifts from old to new growth drivers, the recovery in industrial firms’ profitability still needs to be put on a firmer footing, Beijing’s chief statistician Yu Weining said.
With some 70% of Chinese household wealth tied to real estate, a prolonged property downturn since mid-2021 has consistently dampened consumer confidence and spending.
Beijing’s leadership has repeatedly pledged to lift household consumption, bolster employment and revive prices, but the public has remained largely unmoved.
Analysts polled by Reuters forecast the private-sector RatingDog PMI to come in at 49.8, slightly down from 49.9 a month prior.
(Reporting by Xiuhao Chen and Joe Cash; Editing by Sam Holmes)
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