China`s manufacturing sector expanded at a weaker than expected pace in December, with growth slowing from the previous month as the world`s second-largest economy heads into 2017. 

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The official Purchasing Managers` Index (PMI) stood at 51.4 in December, slowing from the previous month`s 51.7, and above the 50-point mark that separates growth from contraction on a monthly basis.

December`s reading was slightly below the prediction of a Reuters poll for 51.5, but marked the fifth straight month of expansion after a rocky start to the year.

China`s manufacturing sector has picked up in recent months, buoyed by a government infrastructure building spree and a housing boom, which have fueled demand for building materials from cement to steel.

Rising commodity prices and stronger demand have boosted profits for industrial firms, and helped revive inflation expectations worldwide, though analysts question whether growth will be sustainable once when the impact of stimulus measures begins to wear off.  

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China`s economy expanded at a steady 6.7% clip in the third quarter (Q3) and looks set to hit Beijing`s full-year target of 6.5 to 7%, fueled by stronger government spending, record bank lending and a red-hot property market, which are also adding to explosive growth in debt.

Factory output slowed in December, with the sub-index hitting 53.3 from 53.9 the previous month.

Total new orders were flat at 53.2, logging the same 53.2 as November, while new export orders fell to 50.1 from 50.3.

Jobs were again lost, with the employment sub-index sitting at 48.9, compared to 49.2 in November, as the country pledged to cut excess capacity over a range of industries. 

A sub-index for smaller firms fell, and performance for larger companies also worsened.

A separate reading on the services sector showed the pace of growth slowed in December from the previous month.

The official non-manufacturing Purchasing Managers` Index (PMI) stood at 54.5 in December, down from 54.7 in November, but well above the 50-point mark.

China is counting on growth in services to offset persistent weakness in exports that is dragging on the economy.

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