China PMIs: Ending the year on a strong note – HSBC

Julia Wang, Economist at HSBC, notes that the Caixin China Manufacturing PMI rose to a near four-year high of 51.9 in December.

Key Quotes

“The official manufacturing PMI eased marginally to 51.4, which was nonetheless the second highest reading in two years. Export orders remain quite soft. But domestic demand held up, and even accelerated in sectors such as infrastructure. Consumption-related manufacturing industries also did relatively well, while the property sector eased following policy tightening. Economic activity likely expanded at a robust pace in December and in Q4 as a whole. But challenges remain, particularly on the external front.”

“We expect the PBoC to be on hold in 2017, with a more vigilant stance toward ‘asset bubbles’. But we expect fiscal policy to remain expansionary in order to guard against the downside risks to growth.”