Manufacturing activity in the mainland grew at a mild pace in the past three consecutive months, suggesting that demand has stabilized in the world's second largest economy.The purchasing managers' index stood at 50.6 in December, the National Bureau of Statistics said yesterday.
The reading - unchanged from November's PMI - was the third consecutive month above 50, but slightly below the market consensus of 51.
"The reading shows the momentum of the economic recovery is relatively weak," said CFLP analyst Zhang Liqun.
Production growth slowed slightly in December as the index fell 0.5 percentage points month on month to 52.
Boosted by festival effects, new orders for retail consumption-related products such as food, automobile and clothes expanded above 60.
But new export orders fell 0.2 percentage points on a monthly basis to 50 and the imports index continued to shrink. The overall new orders index remained flat at 51.2 in December.
Employment picked up slightly to 49 from 48.7 in November, but was still lower than the average of 49.1 in the second half of last year.
Lu Ting, a China economist at Bank of America Merrill Lynch, pointed out that investors are more interested in how sustainable the current recovery is and when to take profit.
"Feedback from our global markets in the past two months suggests that even those die-hard perpetual China bears now believe in a soft landing," said Lu.
He forecasts a supportive micro environment of asset prices in the first half of this year, but a less supportive or even negative environment in the second half as growth slows and inflation rises.
Investors will shift their attention to China's structural issues such as shadow banking, government debt and the property bubble, he added.
