China's Factory Activity Rebounds in December, Ends Eight-Month Slump

• China's official manufacturing PMI rose to 50.1 in December, exceeding forecasts and marking growth after eight months of decline.
• The rebound was driven by increased domestic orders and pre-holiday stockpiling for Lunar New Year, particularly in agricultural and food sectors.
• Production and new orders sub-indices showed their strongest performance since March, indicating improved confidence.
• Despite domestic gains, new export orders remained sluggish, highlighting the need to boost internal demand and reduce reliance on foreign markets.
• Policymakers face challenges like depressed domestic demand, risk of deflation, and consumer reluctance to spend amid an uncertain job market and property crisis.

Why It Matters: China's factory activity saw unexpected growth in December, ending a long slump, but faces underlying demand issues.