China’s factories expanded in December for the first time since early 2025, offering a tentative boost for the world’s second-largest economy after months of weak demand. The official manufacturing purchasing managers index (PMI) rose to 50.1, just above the 50 threshold that separates expansion from contraction, the National Bureau of Statistics reported. A private-sector survey showed the same reading, signaling a marginal recovery.
The pickup in activity was supported by higher orders ahead of the year-end holidays and efforts by builders to complete projects. High-tech industries, in particular, showed strong growth, with the official PMI for high-tech manufacturing reaching 52.5, up 2.4 points from the previous month. Equipment manufacturing and consumer goods industries also saw modest expansions, both at 50.4.
“Overall, the manufacturing sector regained growth at the end of 2025,” Yao Yu, founder of RatingDog, a Chinese credit research and analysis firm, said in a statement. “However, the improvement was marginal, with the impact of promotions and new products appearing impulse-driven and their sustainability requiring observation.”
The rebound is partly attributed to an easing of trade tensions with the United States and the usual seasonal boost as companies ramp up production before the New Year holidays. PMIs for food, textiles, clothing, and electronics were above 53, reflecting stronger performance in these sectors. Large manufacturers reported higher output, but small and mid-sized enterprises, which employ most of China’s workforce, remained in contractionary territory.
Despite the positive signal, challenges remain. Consumer spending has weakened, impacting retailers and restaurants, while structural issues such as excess capacity in industries like automaking continue to weigh on the economy. The property sector slump and rising costs for raw materials, particularly metals, have squeezed company profit margins. RatingDog noted that exporters increased prices for the first time in three months to offset rising costs.
Economists caution that the upturn may be short-lived. Julian Evans-Pritchard of Capital Economics said the rebound was partly supported by a modest increase in government spending, but structural headwinds from industrial overcapacity and the property downturn are likely to persist. “There appears to be limited appetite among policymakers for a big increase in demand-side stimulus,” he said.
China is forecast to grow slightly below its official target of around 5 percent this year. While the December rebound offers a rare bright spot after months of slowing demand, policymakers face the ongoing challenge of sustaining growth amid structural strains and cautious consumer behavior.
