Purchasing Manager Index (PMI) points to renewed expansion in the Chinese manufacturing sector:

Both the Chinese government PMI (National Bureau of Statistics) and the HSBC PMI have indicated an expansion in manufacturing activity in December 2009, with numbers of 56.6 and 56.1 respectively. It is thought that this record expansion (the highest since the survey was established in April 2004) is partly due to a second wave of Central Government spending measures. Notably, manufacturing prices rose at their highest rate in 17 months but many observers believe that due to excess industrial capacity that resulted from the downturn in export demand, there will be some downward pressure on prices which should keep inflation at bay. Unlike last year, there were strong export orders recorded (as one would expect in the lead up to Christmas and prior to Chinese New Year) that may indicate the reliance of the manufacturing sector on domestic demand is lessening. Although one can expect some factories to start reacting to the renewed demand by increasing prices, the fact that there is excess capacity in order books across the country suggests that there are still good deals to be had.