Workers operate a robot on a production line in a glass factory in Qinhuangdao, North China's Hebei Province on Saturday. In line with the country's massive industrial upgrading, Qinhuangdao has been investing heavily in modernizing its manufacturing sector. The project at the glass factory will cost up to 510 million yuan ($72.79 million). Photo: CNS Photo

China's manufacturing activity in December remained in the expansion territory but slipped from a three-year peak in November, due to the slowing growth of domestic demand, the Caixin Purchasing Managers' Index (PMI) for manufacturing suggested. 

The Caixin manufacturing PMI in December came in at 51.5, compared with 51.8 in November. Readings above 50 suggest expansion, while numbers below 50 fall into contraction territory. 

The reading in December marked the end of a five-month rise and fell slightly short of the 51.8 market expectation, though it was higher than readings in the first three quarters of 2019.

The drop from the previous month was partly attributable to the slowing growth of domestic orders, according to a Caixin report that cited Zhong Zhengsheng, director of macroeconomic analysis at consultancy CEBM Group. 

Input costs rose faster in December than in the previous month, with the increased costs of staff and raw materials pushing up selling prices from producers, Caixin's survey showed. 

However, the general trend of manufacturing activity is likely to remain stable as an index for future output expectations rose in December, which suggested manufacturers' increasing confidence. 

"As a phase one trade deal between China and the US is expected to be signed soon, companies are more optimistic about international trade relations, and are expecting more international orders to come in," Tian Yun, vice president of the Beijing Economic Operation Association, told the Global Times on Thursday.

China and the US reached an agreement on a phase one deal in December, which includes rolling back some US tariffs imposed on Chinese products. 

Tian also expects domestic demand to rise in the coming months as the effect of large infrastructure projects start to kick in, boosting domestic orders. 

"Although the reading in December was the lowest in three months, manufacturing activity showed much stronger growth over the last quarter in general, suggesting a rising trend and overall optimistic outlook," Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times.

The official manufacturing PMI for December stood at 50.2, unchanged from the previous reading, according to the National Bureau of Statistics on Tuesday.