China’s post-property-slump recovery is still uneven. A private survey showed the service sector expanded at its slowest pace in six months in December. The RatingDog services PMI edged down to 52.0 from 52.1, staying in expansion but losing momentum as new business growth cooled and foreign demand weakened.
The report’s details matter for 2026 positioning. New export business slipped back into contraction, which the survey linked to lower tourism. Firms also cut staffing for a fifth straight month, a sign that companies are still protecting margins rather than hiring into demand. Meanwhile, input costs rose for a 10th consecutive month, but selling prices fell as competition limited pricing power, according to the same survey.
That mix. rising costs, falling prices, shrinking payrolls. helps explain why Beijing continues to focus on deflation risk and confidence building. In the background, China is still managing structural headwinds: a prolonged property downturn and persistent disinflation pressures. Policymakers have signaled more support. At a December leadership meeting, leaders promised a “proactive” fiscal policy in 2026 aimed at stimulating consumption and investment.
There are also signs the broader economy is stabilizing. The official manufacturing PMI returned to expansion in December at 50.1 from 49.2 in November, while the official composite PMI rose to 50.7 from 49.7, according to China’s statistics bureau. But the services slowdown suggests demand is not yet strong enough to restore pricing power across the economy.
For readers watching China exposure. focus on whether fiscal support translates into stronger domestic orders without reigniting unproductive price wars. The next key tell will be whether employment stops shrinking and whether services prices stabilize, because that is where deflation risk becomes entrenched.
