China’s factory activity extended its decline into a sixth month, the longest slump since 2019, as the economy descends into a slowdown after a growth spurt to start the year.
The official manufacturing purchasing managers’ index was 49.8, versus 49.4 in August, the National Bureau of Statistics said Tuesday. The median estimate of economists surveyed by Bloomberg was 49.6. A reading below 50 indicates contraction.
The non-manufacturing measure of activity in construction and services fell to 50 from 50.3 last month, the statistics office said. That compares with a forecast of 50.2.
It’s the first evidence that weakness in the economy persisted through the end of the third quarter after its two worst months this year in July and August. Hurting the outlook for Chinese factories is subdued domestic demand, while uncertainty around US tariffs creates risks for exporters.
A boom in exports is cooling off after companies rushed to ship products to get ahead of US President Donald Trump’s tariffs. Many analysts and investors expect a slowdown in China’s economy during the final months of 2025 after it clocked growth of 5.3% in the first half.
A key question now is if the government will step in and add stimulus to support growth, especially as the ruling Communist Party prepares to convene a closed-door meeting in October to review development plans for the next five years.
Another constraint on the economy is a real estate market still in distress after a crisis started in 2021. China’s home sales extended their slump in August even as the country’s two biggest cities rolled out additional stimulus measures.
“The property market shows no sign of recovery,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd. “This is different from the situation of 2019-2020. The market expectation has changed. And the slowdown is more structural than cyclical.”
Although US-China relations appear to have stabilised following a telephone call between their two leaders, a 90-day tariff truce between the nations is set to expire in early November. Trump said he will be meeting Chinese President Xi Jinping on the sidelines of the upcoming Asia-Pacific Economic Cooperation summit in South Korea.
The government’s campaign that aims to ease overcapacity and excessive competition among companies is also putting pressure on the economy. The effort escalated in early July and may have contributed to a fall in output for products like steel.
Source: theedgemalaysia