BEIJING — Chinese factory activity shrank again in December as demand at home and abroad slackened, a purchasing managers’ survey showed Friday, reinforcing the case for pro-growth policies to bolster the economy.
Also Friday, the renminbi closed at a record high against the dollar, passing through resistance at 6.30 renminbi to the dollar and ending the year with an appreciation of 4.7 percent. Traders said there had been signs that the central bank intervened to push the renminbi up at the end of the year.
The HSBC purchasing managers’ index, designed to preview the state of Chinese industry before official output data are published, edged up to 48.7 in December, from a 32-month low of 47.7 in November. The HSBC index has been mostly under 50, which separates expansion from contraction, since July.
The official index, due to be published Sunday, is expected to paint a similar picture, suggesting that the world’s second-largest economy after the United States is finishing 2011 on a weak note, in tandem with the global economic outlook.
“While the pace of slowdown is stabilizing somewhat, weakening external demand is starting to bite,” said Qu Hongbin, China economist at HSBC. “This, plus ongoing property market corrections, adds to calls for more aggressive action on fiscal and monetary fronts to stabilize growth and jobs, especially with prices easing rapidly.”
Mr. Qu said China would avoid a hard economic landing as long as policy easing measures filtered through in the coming months.
HSBC said a purchasing managers’ index reading of as low as 48 in China still pointed to annual growth of 12 to 13 percent in industrial output.
China’s once turbocharged economy is on track to slow for a fourth successive quarter, easing further from the 9.7 percent annual growth rate of the first quarter, with economists expecting the final three months of the year to have slipped below 9 percent.
On the currency front, the renminbi’s gains for the year are in line with the 4 percent to 5 percent that traders on the mainland had expected at the start of the year.
Traders forecast that the renminbi would keep appreciating in 2012, as China faces pressure from the United States to do more to rebalance bilateral and world trade, while it continues to record trade surpluses. But the rate of appreciation is expected to slow to about 3 percent in 2012, with most of the gains happening in the second half, they said.
All told, the renminbi appreciated 4.7 percent in 2011. It has risen 8.5 percent since June 2010, when the government abolished a peg to the dollar that had lasted two years, and 31.5 percent since the peg was lifted in July 2005.
There is speculation that the renminbi will depreciate in the near-term as exports are buffeted by recession in major economies, though analysts expect the longer-term uptrend to remain intact.
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