Rebound gains momentum in November

Wu Chaoming, chief economist with Chasing Securities, said domestic demand related to consumption and infrastructure recovered last month while the Singles Day shopping festival has driven up new orders for manufacturers.

Wu cited the robust recovery in exports as another key factor buoying the manufacturing sector, with the sub-gauge for new export orders having risen for seven consecutive months to 51.5 in November.

The acceleration of the rebound in domestic demand may continue into the first quarter of 2021, as corporate earnings recover while household incomes increase, said a report from the China Macroeconomy Forum, backed by Renmin University of China.

However, aggregate demand has remained weak despite these improvements, the report said.

The nation should roll out reform measures and macro policies next year to boost domestic demand, including those to lift personal incomes, as part of efforts to build the new development paradigm, it said.

Monetary policy

China will nurture a strong domestic market and establish a new development paradigm, in which internal economic circulation is the mainstay while the domestic and external markets can support each other, according to the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China.

Experts said China will maintain a structurally accommodative monetary policy to sustain the economic recovery, which avoids excessive easing or sudden tightening.

"The economy has not recovered to an overheated or utterly healthy condition. Overall, monetary policy is expected to remain supportive for the economy," said Zhou Hao, senior emerging markets economist at Commerzbank, a German lender.

The NBS said the recovery of the manufacturing sector remained "unbalanced", as the textile and clothing sector remained in contraction territory last month, while some exporters reported that a stronger yuan had dampened export orders.

The bureau also reported the fast expansion of the financial sector last month with a PMI reading of more than 60, amid the sector's stepped-up efforts to back the economy.