China is very close to meeting its economic target for 2025, according to Chinese President Xi. Speaking at the annual session of the Chinese People’s Political Consultative Conference, he said the country has essentially achieved its planned 5% GDP growth, describing the past year as “exceptional” due to China’s ability to withstand strong global pressures.
Xi noted that growth of around 5% would keep China among the world’s leading economies. At the same time, he emphasized a strategic shift away from growth driven purely by speed toward higher-quality development, technological progress, and innovation. He also warned against “reckless” investment projects and supported slower growth in certain regions to avoid unnecessary risks.
Manufacturing and Services Return to Expansion
Economic data largely support the president’s remarks. China’s official manufacturing Purchasing Managers’ Index (PMI) rose to 50.1 in December, moving back above the expansion threshold and beating market expectations of 49.2. This marked a clear improvement from November.
Broader indicators point in the same direction. The composite PMI, which includes both manufacturing and services, climbed from 49.7 to 50.7, signaling a return to expansion. The non-manufacturing PMI, covering services and construction, also improved, rising to 50.2 from 49.5 in the previous month.
Officials from the National Bureau of Statistics noted a clear increase in new orders in December, pointing to a meaningful expansion on both the supply and demand sides of the economy.
Private-Sector Data Confirm Growth, Confidence Remains Fragile
Private-sector indicators echo the official figures. A separate PMI compiled by RatingDog rose to 50.1 in December from 49.9, exceeding expectations. According to the firm’s founder, manufacturing activity is picking up again, with new orders rising for seven consecutive months, supported by product launches and higher trading activity.
However, he cautioned that business confidence remains below normal levels. While companies are still hopeful about 2026, uncertainty continues to weigh on sentiment.
Large Companies Lead, Smaller Firms Lag Behind
A closer look at the data reveals an uneven recovery. Large enterprises are leading the rebound, with their PMI jumping to 50.8—an increase of 1.5 points month over month. Medium-sized firms improved slightly to 49.8 but remain below the growth threshold. Small businesses continue to struggle, with their PMI falling to 48.6, down 0.5 points from November.
Markets Remain Cautious
Financial markets reacted without strong enthusiasm. Hong Kong’s Hang Seng Index fell 0.83%, while the mainland CSI 300 edged up 0.33%. The mixed response suggests investors are still waiting for clearer signs of a durable, long-term recovery.
The outlook is further complicated by the central bank’s recent decision to keep key lending rates unchanged, despite weak domestic demand and ongoing stress in the property sector. November data on retail sales, industrial output, and fixed-asset investment all came in below expectations, underscoring lingering weaknesses in the recovery.
Beijing Carefully Manages the Yuan
Meanwhile, policymakers continue to manage currency pressures cautiously. The yuan has been allowed to strengthen only gradually, a move intended to reassure trading partners and prevent a rapid inflow of speculative capital. A firmer currency could help lower import costs and move China closer to its long-term goal of elevating the yuan’s role on the global stage.
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