China limps into new year as manufacturing declines CHINA'S economy has started the year under a cloud after manufacturing growth slowed last month for the first time in six months. The purchasing managers' index was at 51, down from November's 51.4, the National Bureau of Statistics said on its website yesterday. A reading above 50 signals expansion while a figure below indicates contraction. It marked the 15th straight month of expansion but it is the first time the figure has dipped from the previous month since June. It comes amid fresh concerns about high levels of debt in China and the local banking system's exposure to bad debt -- an ongoing concern. A material slowdown in China would have implications across the region, particularly for Australia because of the nation's earnings from exports of iron ore and coal. The iron ore price is trading around $US134 a tonne, higher than expected by several analysts. But lower growth in China could depress the steel making ingredient. Goldman Sachs expects the price to slide to $US90 a tonne in the medium term. China's stockmarket trailed global markets last year, with the Shanghai Composite down more than 7 per cent compared to almost 30 per cent on Wall Street. Shanghai's slide contrasts sharply with the performance of Japan's Nikkei Stock Average, which notched up the largest gains in the region this year: up 56.7 per cent, making it the market's best year since 1972. In other markets, Australia was up 15.1 per cent for the year and Hong Kong notched a 2.9 per cent rise. Last year in particular, rising money market rates shook confidence in the Chinese stockmarket and contributed to its fourth consecutive year of poor performance. On Tuesday, the theme remained evident in news that the debt and guarantees issued by local governments rose 67 per cent to 17.9 trillion yuan ($2.95 trillion) in the middle of last year, compared with 10.7 trillion yuan at the end of 2010, according to China's National Audit Office, which released the data Monday. China's economy, a crucial driver of regional and global growth, expanded 7.8 per cent from July to September, snapping two quarters of slowing. But analysts have warned weaknesses remain in the world's second-largest economy. A government report cited by state media last week suggested China's economy grew 7.6 per cent last year, slightly above its official target for the year and just below the 7.7 expansion in gross domestic product in 2012 -- the worst growth rate for 13 years. In March, China announced an official target of 7.5 per cent growth for last year. The government usually announces a conservative number that it regularly surpasses. "Stimulus measures announced by China's government early in 2013 are pushing the economy toward its potential growth rate, now estimated at 7.5 per cent to 8 per cent," Moody's analysts said this month.