China's manufacturing to expand in 2018: investment bank CICC

A man works at a pipe factory in Hubei Province, December 26, 2017. [Photo: www.vcg.com]

China's manufacturing sector is expected to expand in 2018 despite a slight decline in its index in December, says Chinese investment bank CICC.

China's manufacturing purchasing managers' index (PMI) came in at 51.6 in December, down from 51.8 in November, according to the National Bureau of Statistics (NBS).

The decline in the index was mainly a result of the lower inventory, says a CICC report.

The report notes production growth remained solid despite the fact that there were fewer working days in December 2017 compared with December 2016. 

It is worth noting that China's manufacturing continued to upgrade, it said. PMI for the high-tech sector picked up further to 53.8 in December from 53.2 in November, NBS data showed.

The investment bank also notes the momentum with the international demand. The New Export Orders Index picked up to 51.9 from 50.8 in November, "partially driven by the rush of holiday season orders," says CICC, adding that China's export demand may continue to benefit from a synchronized recovery in the global economy.

Despite the negative impact from the working day effect and lower inventory, December manufacturing PMI indicated that the Chinese economy continued to pick up strength, CICC said.

It is likely that China's manufacturing capacity expansion is in its early days and have more legs to run on, CICC said.