In December, China’s activity in factories is expected to expand again owing to strong external demand and infrastructure push from home. However, as the country awaits more certainty on a U.S.-China trade truce, the growth pace will ease in markets. In November, growth in China’s retail and industrial sectors both have boosted the expectations.
Analysts at China International Capital Corp (CIIC) said that the country has four pillars supporting its recovery, first, rebound in external demand, second is increasing investments in infrastructure, third is the resilient property market, and fourth is an inventory restocking cycle. Furthermore, improved growth expectations has propelled them.
According to the median forecasts of 27 economists, for December, the official Purchasing Managers’ Index (PMI) is expected slightly above the 50-point mark, around 50.1, separating the expansion from contraction on a monthly basis.
Earlier this month, China and the United States announced their phase one trade agreement. According to this agreement, some tariffs will be reduced on goods imported from China, in exchange to what is said to be a big jump in Chinese purchases of American farm products and other goods.
In December, Shanghai Shipping Exchange in their export container shipping index tracked that the China Containerized Freight Index rebounded sharply. They have also pointed at improved export demand, noted, Zhang Deli, an analyst from Lianxun Securities.
However, uncertainty remains on when and where the formal signing of a trade deal will take place. Additionally, there has been no announcement of phase two of the deal. This deal will involve more complicated topics including forced technology transfers to the U.S. firms.