In December this year, the China HSBC Flash Manufacturing Purchasing Managers Index (PMI) increased to 50.9, indicating a 14-month high and comparing to the final value of 50.5 in November, as announced by the HSBC.
Most sub-indexes improved with the exception of output and new export orders, which dipped, possibly reflecting softer end-of-year orders. The new order index for the manufacturing sector in China rose to 52.7 in December, reaching the highest level since April 2011.
Improving conditions are primarily driven by domestic demand, as stated by Hongbin Qu, chief economist for China at HSBC.
"The drop in new export orders and the downside surprise of November export growth suggest persisting external headwinds. This calls for the government to keep an accommodative policy stance to counterbalance the external weakness, provided inflation stays benign," Qu added.