CHINA’S BIG manufacturers narrowly avoided a contraction in December, a survey showed yesterday, but downward risks persist and suggest the world’s second-largest economy will need fresh policy support to counter a slowdown in growth.

The official purchasing managers’ index (PMI), compiled by the China Federation of Logistics and Purchasing on behalf of the National Bureau of Statistics, rose to 50.3 in December from 49 in November.

That indicated a slight expansion in business activity in China’s vast factory sector, but the reading was barely above the flat line of 50 that demarcates expansion from contraction, which the index fell below in November for the first time since early 2009.

Analysts had expected the official PMI to be at 49.1 in December.

“The rebound in the December PMI shows that there will be no big slowdown in the Chinese economy,” Zhang Liqun, a researcher with the development research centre of the state council, wrote in the federation statement.

The economy faces downward pressure but there are positive elements that could underpin growth, he said.

The new orders sub-index rose to 49.8 in December from 47.8 in November while the sub-index for new export orders rose to 48.6 from November’s 45.6.

A similar survey on Friday by HSBC and UK-based data provider Markit, which captures data from smaller factories, inched up to 48.7 in December from a 32-month low of 47.7 in November.

However, this survey still signalled a modest contraction in activity on the month, reinforcing the case for pro-growth policies.