(Yicai Global) Dec. 3 -- The Caixin China Manufacturing Purchase Manager Index for last month reads 50.2 today with a slight monthly increase of 0.1 percent, indicating a slight expansion of the economy.

Caixin's reading of Chinese Manufacturing PMI is different from that of China's National Bureau of Statistics, which announced a PMI of 50 percent with a monthly drop of 0.2 percent on Nov. 30.

Domestic demand in manufacturing rebounded slightly, while external demand was still depressed last month, said Zhong Zhengsheng, chairman and chief economist at Caixin Insights. Production still slowed last month, but companies seemed unfazed, capital turnover improved slightly, and upward pressure on industrial product prices eased, Zhong explained, saying "China's economic growth is weak, but is not greatly deteriorating."

Five sub-indices constitute the manufacturing PMI, among which the production index, the new order index and the supplier delivery time index were above the critical point for the period, and the raw material inventory index and the employee index were below the redline.

Manufacturing exhibited the following characteristics last month, noted Zhao Qinghe a senior statistician with China's statistics bureau. First, the price index dropped significantly, second, production remained stable and demand expansion slowed, while, third, most manufacturing sectors were in expansion, and fourth, imports and exports stayed at a low level.

The decline in the order-based  and price indexes was the main cause of the weakening of last month's manufacturing PMI, said Lian Ping, tchief economist at the Bank of Communications.

The new order index fell by 0.4 percent per month, and the order in hand index went as low as 44.3 percent, indicating that demand is shrinking within the sector. The new export order index was 47 percent, which has been lower than the critical value for six straight months and is still heading south, indicating slowing future export growth. The decline in prices of supply and demand will surely affect manufacturing activity.

The manufacturing, non-manufacturing and integrated PMI all fell for two straight months, indicating an increase in economic downside risks, Lian noted. The room for macroeconomic regulation is still large, he said. Aggressive macro policies, more tax and fee reductions, weakness-specific solutions and domestic demand expansion will stabilize the economy, he advised.

The PMI of large companies was down 1 percent to 50.6 percent, still above the tipping point. The PMI of medium firms rose 1.4 percent to 49.1 percent, and that of small firms dropped 0.6 percent to 49.2 percent, both below the crossover.

Policy support needs more time to influence the economy, said Li He, a researcher at the Institute of International Finance of the Bank of China. The PMI changes of small and mid-sized enterprises were better than those of large ones due to the government's help in financing, credit and other areas.

Non-manufacturing ran in a stable manner and the service sector accelerated its expansion. The business activity index of the service sector was 52.4 percent, up 0.3 percent from the previous month.

Boosted by China's Black Friday-style Double 11 shopping festival, the business activity index of the express delivery, telecommunications and internet software sectors stood at 56 percent and above, with their overall businesses achieving rapid growth, Zhao Qinghe said, adding that the PMI of banking, securities, insurance and other financial sectors exceeded 60 percent, indicating expansion.

China's PMI index dropped 0.2 percent from last month to the critical 50 percent point, the lowest since July 2016, per data China's National Bureau of Statistics issued Nov. 30.

Editor: Ben Armour