China’s manufacturing sector has broken an eight-month contraction streak with December data indicating a return to expansion, according to official surveys released Wednesday. The National Bureau of Statistics reported the official purchasing managers index (PMI) climbed to 50.1 this month, narrowly crossing the 50-point threshold that separates expansion from contraction. A parallel private sector survey mirrored this reading at 50.1.
The unexpected rebound reflects multiple factors including a temporary truce in U.S.-China trade tensions and manufacturers accelerating production ahead of the extended Lunar New Year holidays in mid-February. High-tech manufacturing demonstrated particularly robust performance, registering a PMI of 52.5 in December—a significant 2.4 percentage point increase from November.
Sector-specific analysis revealed equipment manufacturing and consumer goods industries both reached 50.4 PMI readings. The food, textiles, apparel, and electronics sectors performed especially well with measures exceeding 53 points.
However, the recovery remains uneven. While large manufacturers increased output, small and mid-sized enterprises—which employ the majority of China’s workforce—continued to contract. The RatingDog research firm noted that despite overall order improvements, new export sales declined slightly and hiring weakened.
RatingDog founder Yao Yu cautioned that while manufacturing regained growth at year-end, “the improvement was marginal, with the impact of promotions and new products appearing impulse-driven and their sustainability requiring observation.”
Economists point to persistent structural challenges including a prolonged property sector slump, industrial overcapacity, and squeezed profit margins due to rising raw material costs. Exporters responded by raising prices for the first time in three months to offset these higher costs.
Julian Evans-Pritchard of Capital Economics suggested the upturn might be temporary, noting limited policy appetite for substantial demand-side stimulus amid ongoing property and industrial capacity headwinds expected to persist through 2026.