Asia’s largest manufacturing economies showed signs of recovery in November, with China’s factory activity expanding at the fastest pace in five months.
The rebound, fueled by Beijing’s stimulus efforts and a surge in export orders, provided a boost to other Asian nations, although challenges remain in some parts of the region.
According to the Caixin Purchasing Managers’ Index (PMI), China’s manufacturing sector saw a solid rise in production in November, driven by an increase in new orders, including strong demand from abroad. This expansion largely mirrored a modest growth seen in an official government survey released over the weekend, suggesting that the stimulus measures introduced by Beijing to counteract a sharp economic slowdown are having some positive effects.
The improvement in China’s manufacturing sector also had a ripple effect on other Asian economies, with countries like South Korea and Taiwan reporting an uptick in factory activity. However, the recovery in China has been primarily export-driven, with domestic demand still showing weakness. The official non-manufacturing PMI, which tracks service sector activity, remained flat at 50, indicating subdued domestic spending.
Xing Zhaopeng, senior China strategist at ANZ, noted that although China’s stimulus is stabilizing key sectors like retail and property, the domestic economy has yet to fully recover.
“New export orders suggest a rush to secure goods ahead of potential tariffs, but the weak domestic demand remains a concern,” Xing said.
The recovery in China is timely as manufacturers rush to complete orders before the threat of new tariffs looms. US President-elect Donald Trump has proposed significant tariffs on goods from China and other trading partners, including a 10% tariff on Chinese imports. Trump’s stance on trade has raised concerns about the future stability of global trade, particularly for export-heavy economies in Asia.
While China shows signs of improvement, other Asian nations are facing mixed manufacturing conditions. Japan reported its steepest decline in factory activity in eight months, with weakening demand leading to a reduction in production. However, data showed that Japanese corporate investment in plant and equipment picked up in the third quarter, offering some counterbalance to the factory slowdown.
In India, factory activity continued to grow, but the pace slowed slightly due to persistent price pressures. Despite the slowdown, India remains one of Asia’s stronger performers, although official data revealed that its economic expansion was weaker than expected in the third quarter, driven by sluggish manufacturing and consumption.
Southeast Asia’s manufacturing sector also faced challenges, with PMIs showing continued contractions in Indonesia and Malaysia, and slowing growth in Thailand and Vietnam. Despite these regional slowdowns, China’s manufacturing activity marked its second consecutive month of growth, further signaling stabilization in the world’s second-largest economy.
