Morgan Stanley’s Xing notes a strong rebound in China’s December economic indicators, with factory output and retail sales accelerating sharply. The data suggests resilience in domestic demand and potential support for policy easing.
- Factory output grew 5.8% year-on-year in December, up from 4.2% in November
- Retail sales rose 6.3%, exceeding forecasts and indicating strong consumer recovery
- Caixin Manufacturing PMI hit 52.4, the highest since early 2024
- Fixed asset investment expanded at a 4.9% annual rate
- Exports declined 2.1% year-on-year, reflecting weak global demand
- CSI 300 index rose 2.3% following data release
Morgan Stanley analyst Xing reported a notable uptick in China’s December economic data, citing factory output expanding at a 5.8% year-on-year pace, up from 4.2% in November. This marks the fastest growth since April 2024 and reflects improved industrial activity amid targeted stimulus measures. Retail sales rose 6.3%, surpassing expectations and indicating a strengthening consumer recovery, particularly in electronics and green energy products. The data comes as Beijing intensifies its efforts to stabilize growth, with recent cuts to reserve requirement ratios and increased infrastructure funding. According to Xing, the December performance signals that policy support is beginning to take effect, especially in manufacturing and urban consumption. The services sector also expanded at a 6.1% annual rate, driven by travel and digital services. Key indicators such as the Caixin Manufacturing PMI reached 52.4 in December, its highest level since early 2024, while fixed asset investment accelerated to a 4.9% annual increase. These figures suggest a broad-based rebound, though exports remain under pressure, declining 2.1% year-on-year amid weak global demand. Market reactions have been positive, with the CSI 300 index rising 2.3% in early trading on the back of the data. Chinese tech stocks, particularly those in EVs and semiconductors, saw gains, reflecting investor confidence in domestic-driven growth. Analysts caution, however, that external headwinds and property sector vulnerabilities could limit sustained momentum without further policy action.