### China's Manufacturing Sector Sees Unexpected Growth, Ending Record Slump In December 2025, China's manufacturing sector experienced a surprising rebound, marking the end of an eight-month contraction, the longest slump on record. The official Purchasing Managers' Index (PMI) rose to 50.1, surpassing the critical threshold of 50 that indicates expansion, up from 49.2 in November. This growth is attributed to increased domestic orders and pre-holiday stockpiling, providing a glimmer of hope for policymakers aiming to stabilize the economy amid ongoing challenges, including deflationary pressures and weak global demand [https://www.straitstimes.com/business/economy/china-factory-activity-grows-ending-longest-slump-on-record][https://www.channelnewsasia.com/business/china-factory-activity-pmi-growth-december-5770841]. ### Breakdown of the Manufacturing Recovery 1. **Unexpected Growth in December**: - China's manufacturing activity returned to growth, with the PMI rising to 50.1, indicating a shift from contraction to expansion [https://www.finanznachrichten.de/nachrichten-2025-12/67333577-china-manufacturing-sector-recovers-in-december-020.htm]. 2. **Factors Contributing to Growth**: - Increased domestic orders and festive stockpiling ahead of the New Year holidays played a significant role in this recovery [https://www.businesstimes.com.sg/international/chinas-factory-activity-snaps-record-slump-festive-stockpiling]. - The easing of trade tensions with the U.S. also contributed to improved manufacturing conditions [https://www.kaaltv.com/ap-top-news/china-factory-activity-picks-up-in-december-as-orders-rebound-ahead-of-holidays]. 3. **Economic Implications**: - This growth provides a tentative boost for China's economy, which has been struggling with weak demand and deflationary risks [https://www.euronews.com/business/2025/12/31/chinas-factories-return-to-growth-after-eight-month-slump]. - Policymakers are encouraged by this data as they strive to meet economic growth targets for the year [https://www.srnnews.com/chinas-factory-activity-returns-to-growth-in-december]. ### Supporting Data and Evidence - **PMI Data**: - December PMI: **50.1** (up from **49.2** in November) [https://www.newsbytesapp.com/news/business/china-s-factory-activity-expands-ending-longest-slump-on-record/story]. - The PMI reading indicates a return to growth, as it is above the neutral mark of 50 [https://bluewaterhealthyliving.com/news/business-and-economy/chinas-factory-activity-snaps-eight-month-slump-on-festive-stockpiling]. - **Sector Performance**: - The recovery is supported by stronger production levels and an increase in domestic demand, despite a decline in foreign orders [https://bluewaterhealthyliving.com/news/business-and-economy/chinas-factory-activity-edges-back-to-growth-in-december-private-pmi-shows]. ### Conclusion: A Cautious Optimism for China's Economy **Key Findings**: 1. **Manufacturing Activity Rebounds**: China's manufacturing sector has shown unexpected growth, ending an eight-month decline. 2. **Drivers of Growth**: Increased domestic orders and festive stockpiling are significant contributors to this recovery. 3. **Economic Outlook**: While this growth is promising, the broader economic context remains fragile, necessitating cautious optimism from policymakers. This recovery in manufacturing activity is a crucial development for China's economy, suggesting potential stabilization after a prolonged period of decline. However, the underlying economic challenges must be addressed to ensure sustainable growth moving forward [https://www.euronews.com/business/2025/12/31/chinas-factories-return-to-growth-after-eight-month-slump].