China's manufacturing sector experienced a slowdown in December, with the Caixin manufacturing purchasing managers index dropping to 50.5 from 51.5 in November. This decline comes as investors anticipate further economic stimulus, especially with Donald Trump's return to the White House and the potential for new tariffs on Chinese exports.
The latest index reading fell short of economists' expectations, which had projected a figure of 51.7, indicating a disappointment for market participants.
In a related development, China is likely to miss its year-end target for increasing the production of less-polluting steel. The country's efforts to enhance the use of cleaner electric-arc furnaces have stalled, further compounded by a property crisis that has affected demand and prices. As the world's largest steelmaker and polluter, China has set ambitious climate targets, aiming for electric-arc furnaces to account for over 15% of total steel output by the end of 2025.