Business

China’s Caixin PMI shows December manufacturing contraction. Analysts had expected slight expansion

Results of a private survey on China’s manufacturing activity for the month of December will be released at 9:45 a.m. SIN/HK on Wednesday, shedding more light on the state of the world’s second-largest economy amid a trade dispute with the U.S.

The Caixin/Markit Manufacturing Purchasing Managers’ index (PMI), a private survey, is expected to show only marginal growth in December, falling to 50.1 from 50.2 in the previous month, according to analysts’ forecast in a Reuters poll.

A reading above 50 indicates expansion, while a reading below that level signals contraction.

Economic data from the world’s second-largest economy is being closely watched for signs of damage inflicted by the ongoing trade war between Washington and Beijing.

Official manufacturing PMI released on Monday showed a slowdown in activity for the month of December as the sector contracted for the first time in more than two years, dropping below the critical 50 level.

The private survey focuses on small and medium-sized enterprises, while the official PMI gauge focuses on large companies and state-owned enterprises.

At the beginning of December, U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day ceasefire that delayed the planned U.S. increase of tariffs on $200 billion worth of Chinese goods that were initially due to take effect on Jan. 1, while the two sides negotiated a trade deal.

On Saturday, Trump said on Twitter that he had a “long and very good call” with Xi and that a possible trade deal between the two countries was progressing well.

Yet beyond the tariffs battle, China’s economy has been facing its own domestic headwinds. Even before the escalation in trade tensions with the U.S. this year, Beijing was already trying to manage a slowdown in its economy after three decades of breakneck growth.

The situation on the ground in China may look worse than any numbers suggest, one analyst told CNBC.

“I do believe, of course, the economy in China is decelerating. I do believe the numbers are worse than reported, of course, in that type of political environment where there’s strong censorship, where media is essentially prevented from reporting,” said Alex Capri, a visiting senior fellow at NUS Business School.

— Reuters contributed to this report.

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