A major Chinese economic indicator hit a four-month high for December

  • The Caixin/Markit manufacturing Purchasing Managers' Index for December came in at 51.5, topping expectations
  • That metric focuses on smaller businesses in China compared to the official PMI reading, which was released on Sunday

A survey focused on small and mid-size businesses in China beat expectations on Monday, reaching a four-month high.

The Caixin/Markit manufacturing Purchasing Managers' Index for December came in at 51.5. Economists polled by Reuters expected the private Caixin/Markit PMI to come in at 50.6 in December versus 50.8 in November.

A reading above 50 indicates expansion, while a reading below that signals contraction.

The positive reading was due to strong performances in both output and new orders, said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin.

"Manufacturing operating conditions improved in December, reinforcing the notion that economic growth has stabilized in 2017 and has even performed better than expected. However, we should not underestimate downward pressure on growth next year due to tightening monetary policy and strengthening oversight on local government financing," Zhong added in a news release.

The Caixin/Markit survey focuses on small and mid-size businesses in China and comes after the world's second-largest economy reported official manufacturing PMI over the weekend.

On Sunday, China reported official manufacturing PMI, as expected, at 51.6 in December — a dip from 51.8 in November, Reuters reported.

Despite concerns about debt and a property bubble, China's economic data showed robust growth in 2017 due to government spending on infrastructure and a pick up in the overall global macroeconomic environment.

While manufacturing is an important part of the Chinese economy, it is "not everything" as consumption is strengthening, said Hao Zhou, senior emerging market economist at Commerzbank.

Caixin/Markit is set to release China's services PMI reading on Thursday.

One key risk the Chinese economy will face this year is U.S. trade protectionism as President Donald Trump continues to signal displeasure over the yawning trade gap between the two countries, said Sian Fenner, senior economist at Oxford Economics.