Earlier this year, PMI statistics declined for five consecutive months starting in April. After briefly expanding in September, it began to decline again in October.
Typically, a reading above 50 indicates an expansion of activity, and a reading below that indicates a contraction.
The Bureau of Statistics pointed to the external environment becoming “increasingly complex, harsh and uncertain” as the main reason for the continued decline.
China may be going through ‘abnormal’ times, but its five-year plan is on track
China may be going through ‘abnormal’ times, but its five-year plan is on track
“As some companies complained in our survey, the decline in orders from overseas and lack of demand from the domestic market are major challenges,” said Zhao Qinghe, a statistician at the bureau.
The non-manufacturing PMI, an indicator of service activity, stood at 50.4 in December, declining to 50.2 last month, the lowest since December of last year, before gradually improving.
He said the construction sub-index rose to 56.9 from 55 in November as some companies accelerated construction before the Lunar New Year in February.
Overall, the composite PMI, which includes both manufacturing and services, was 50.3, down slightly from November’s 50.4.
Last year started on a note of optimism as the country began to reopen its economy after years of strict COVID-19 measures. However, the recovery was weaker than expected, facing headwinds including a bleak export outlook, weak private sector confidence and the local government debt crisis.
In recent months, the central government has announced a series of measures to support growth.
The Chinese government also pledged to make development its top political priority at the Central Economic Work Conference earlier this month, vowing to counter the many risks in its huge economy and boost confidence next year.
Economic powers told to ‘be bolder’ in 2024 to support China’s recovery
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“We believe growth will be stronger next year compared to 2023, primarily based on a cyclical recovery in the real estate sector,” Rhodium Group said in a research note.
“However, structural problems remain unresolved in 2023 and will continue to hold back China’s potential growth.”