China's Economic Dilemma: Balancing Reforms and Stimulus Amidst Manufacturing Slump

China's factory activity shrank for an eighth consecutive month in November, posing a challenge for policymakers: whether to continue structural reforms or introduce more stimulus to boost domestic demand. The manufacturing PMI rose slightly to 49.2, reflecting ongoing struggles post-COVID-19 and trade tensions with the U.S.

China's factory activity has contracted for the eighth straight month in November, underscoring the challenging decision facing policymakers: pursue tough structural reforms or implement further stimulus to boost domestic demand.

The manufacturing purchasing managers' index (PMI) increased marginally to 49.2 from October's 49.0, according to the National Bureau of Statistics, still below the 50-point threshold that differentiates growth from contraction. This figure aligns with analysts' expectations amid ongoing pressure from the U.S.-China trade war and post-COVID-19 challenges.

While output stalled at a sub-index rating of 50.0, both new orders and export orders saw slight improvement but stayed under the 50 mark. Despite the slowdown, Goldman Sachs economist Yuting Yang states that major policy support might be delayed until the first quarter of next year as the current growth target for 2025, around 5%, seems within reach.

(With inputs from agencies.)