BEIJING: China’s manufacturing activity shrank for a third straight month in December and weakened more than expected, clouding the outlook for the country’s economic recovery and raising the case for fresh stimulus measures in the new year, Reuters reported.
The government has in recent months introduced a series of policies to shore up a feeble post-pandemic recovery, which is being held back by a severe property slump, local government debt risks and soft global demand.
But the world’s second-largest economy is still struggling to gain traction.
The official purchasing managers’ index (PMI) fell to 49.0 in December from 49.4 the previous month, an official factory survey showed on Sunday, below the 50-mark separating growth from contraction and weaker than a median forecast of 49.5 in a Reuters poll.
“We must step up policy support, otherwise the trend of slowing growth will continue,” said Nie Wen, an economist at Hwabao Trust. Nie expects the central bank to cut interest rates and banks’ reserve requirement ratios (RRR) in the coming weeks.
“Falling prices have greatly affected companies’ profits and further affected people’s employment and incomes. We may see a vicious cycle,” he said.