"China's Factory Downturn Worsens in December, Stimulus Expected"

China's manufacturing activity contracted for the third consecutive month in December, with the official purchasing managers' index (PMI) falling more than expected, signaling a deepening factory contraction and a challenging economic recovery. This has led to expectations of additional stimulus measures, including potential interest rate cuts and reserve requirement ratio reductions by the central bank. The economic slowdown is attributed to a severe property slump, local government debt risks, soft global demand, and deflationary pressures. The government is likely to focus on fiscal steps to support growth in the coming year, despite weak domestic and external demand.