FXstreet.com (San Francisco) - According to Markit Economics, China’s HSBC Manufacturing Purchasing Managers Index (PMI) picked up in December to 50.9 from 50.5 in November, hitting a 14-month high as operating conditions in the sector continue to improve.

As Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC explains, this reading confirms that China's economic recovery is gaining momentum, “However, the drop of new export orders and the downside surprise of November exports growth suggest the persisting external headwinds,” he says. “This calls for Beijing to keep an accommodative policy stance to counter-balance the external weakness, provided inflation stays benign.”