BEIJING (Reuters) – China’s factory activity likely expanded for a third straight month in December, offering a glimmer of optimism to officials trying to steady the world’s No. 2 economy as they brace for further U.S. trade tariffs under a second Trump administration.
A Reuters poll of 28 economists forecast the official purchasing managers’ index (PMI) would remain at 50.3, matching November’s reading and staying above the 50-point threshold that separates growth from contraction in activity.
China’s leaders are hoping policy support measures late this year will bolster the struggling property market, which significantly impacts domestic demand.
This move could benefit manufacturers amid a global economic slowdown, reducing their exposure to U.S. President-elect Donald Trump’s threat of additional tariffs on Chinese goods.
Mixed industrial output and retail sales data for November released earlier this month underscores how challenging it will be for Beijing to mount a durable economic recovery heading into 2025. Government advisers are recommending that the $19 trillion economy maintain a growth target of around 5.0% next year and that policymakers ramp up consumer-focused stimulus.
Trump has vowed to impose a 10% tariff on Chinese goods to compel Beijing to halt the trafficking of Chinese-made chemicals used in fentanyl production. He also threatened tariffs in excess of 60% on Chinese goods during his campaign, posing a major growth risk for the world’s top exporter of goods.
At an agenda-setting meeting earlier this month, policymakers pledged to increase the budget deficit, issue more debt and loosen monetary policy to support economic growth.
The World Bank last week raised its growth forecasts for China for 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the property sector, would weigh on economic growth next year.
Stabilising the property sector, which at its peak in 2021 accounted for around a quarter of the economy and where 70% of household savings are parked, is critical for Beijing to revive domestic consumption and improve sentiment among factory owners.
Analysts polled by Reuters forecast the private sector Caixin PMI at 51.7. The data will be released on Thursday.
(Reporting by Joe Cash; Polling by Susobhan Sarkar in Bengaluru and Jing Wang in Shanghai; Editing by Jacqueline Wong)
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