China factory activity grows more slowly

China’s manufacturing activity barely grew in December though services and construction recovered, an official survey showed on Tuesday, suggesting policy stimulus is trickling into some sectors as the economy braces for new trade risks.

The National Bureau of Statistics (NBS) purchasing managers’ index (PMI) slowed to 50.1 in December from 50.3 a month prior, staying above the 50-mark separating growth from contraction but missing a median forecast of 50.3 in a Reuters poll.

China’s $18 trillion economy has struggled to recover from the pandemic amid weak consumption and investment, and a protracted property crisis. However, policymakers hope a recent blitz of fiscal and monetary measures will spark a turnaround in the property market, which has dragged on the broader economy.

Improved domestic demand could benefit manufacturers amid a global economic slowdown, reducing the impact of US Presidentelect Donald Trump’s proposed new tariffs on Chinese goods.

“The worst part of overcapacity seems to be over, businesses are receiving more orders,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. “But there is a high risk of activity slowing again if stimulus subsides.”

“The bottom line is the stimulus needs to be sustained.”