Factory activity sees marginal improvement in November

China's factory activity improved slightly in November, but remained below the 50-point mark that separates contraction from expansion, reinforcing analysts' calls for further targeted measures to shore up growth momentum as the year-end approaches.

With the market eagerly awaiting signs of major economic strategies for the next year from the upcoming annual Central Economic Work Conference, analysts said the country will likely adopt a more proactive fiscal policy and a moderately accommodative monetary policy, with the key focus being further expanding domestic demand and boosting consumption.

Their comments came as data from the National Bureau of Statistics showed on Sunday that China's official purchasing managers' index for the manufacturing sector stood at 49.2 in November, up from 49 in October.

Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said that China's manufacturing activity improved marginally as growth-stabilizing policies took effect, external uncertainties eased and seasonal disruptions faded.

"Improved confidence supported by recent growth-stabilizing measures and progress in China-US economic and trade talks pushed the subindex for production and operation activity expectation up 0.3 percentage points from October to 53.1 in November, a relatively high level," he said. "High-tech manufacturing continues to lead in growth and shows strong capacity to withstand shocks."

According to the NBS, the PMI for high-tech manufacturing stood at 50.1 in November, remaining in expansion territory for the 10th consecutive month.

Wang warned that the impact of high tariffs imposed by the United States on global trade and China's exports may become more pronounced toward year-end, while persistent adjustment in the real estate sector could further weigh on demand.

He projected the December manufacturing PMI would ease to around 49.1, saying additional policy support could once again lift sentiment.

"Given the need to stabilize the economy heading into the next year, we do not rule out the possibility of new growth-stabilizing measures," Wang said, citing stronger fiscal support for consumption and a potential new round of reserve requirement ratio and interest rate cuts. "Ultimately, year-end economic momentum will depend on the strength and pace of those policies."

NBS data showed China's nonmanufacturing PMI, which includes subindexes for service sector activity and construction, came in at 49.5 in November, down from 50.1 in October. The country's official composite PMI, which encompasses both manufacturing and nonmanufacturing activities, declined from 50 in October to 49.7 in November.

A report released by CITIC Securities said the nonmanufacturing PMI weakened marginally due to the fading of the holiday effect.

"The effectiveness of the 'anti-involution' policy is continuing to emerge, and with the addition of new policy-based financial instruments, it is expected to provide sustained support for industrial production, and the pattern of moderate fundamental recovery is expected to continue," the report said.

Liu Xiaoguang, deputy dean of Renmin University of China's National Academy of Development and Strategy told the China Macroeconomy Forum held in Beijing on Sunday that despite headwinds from tariff pressures and shifting external conditions, China is still on track to achieve its annual growth target of around 5 percent this year, supported by proactive fiscal policy, accommodative monetary policy, strong resilience in the industrial and services sectors and stronger-than-expected export performance.

On policy priorities for the next year, Liu called for a stronger push to expand domestic demand and stabilize the growth outlook.

He recommended widening fiscal space with a more proactive stance, proposing that the budget deficit ratio be raised to 5 percent in 2026 to create room for greater public expenditure and intensify countercyclical adjustment of fiscal policy. On the monetary policy front, he said the country should maintain a moderately accommodative stance, including further RRR cuts to pave the way for interest rate reductions and more effective deployment of policy-based financial instruments.

Liu emphasized promoting consumption to strengthen the domestic demand foundation, expanding effective investment to support the real economy, stabilizing foreign trade and nurturing new advantages in opening-up.