A worker checks a finished vehicle on the production line for electric vehicle maker Zeekr at its factory on May 29, 2025 in Ningbo, China.
Kevin Frayer | Getty Images News | Getty Images
China’s official gauge for manufacturing activity showed a smaller-than-expected contraction in September as Beijing intensified its efforts aimed at curbing industrial overcapacity amid sluggish domestic demand and global trade disruptions.
The Manufacturing Purchasing Managers’ Index came in at 49.8, data from the National Bureau of Statistics showed, compared with expectations for 49.6, according to a Reuters poll. That reading, while still in contraction, was the strongest since March.
China’s official manufacturing PMI has stayed below the 50-benchmark separating growth from contraction since April as manufacturers have grappled with tepid domestic demand, exacerbated by higher U.S. tariffs that have hit Beijing’s exports to the world’s largest consumer market.
The sub-index tracking production rose to a six-month high of 51.9 in September as manufacturing activity picked up while new orders ticked up to 49.7, according to the official statement. The index measuring manufacturers’ inventories rose to 48.5, indicating that stockpiles of materials were shrinking at a slower pace.
The overall improvement in production was driven by manufacturing of equipment, high-tech and consumer goods, with notable gains in both output and new orders, Lihui Huo, chief statistician at the National Bureau of Statistics, said in a statement.
Private surveyor RatingDog also released its manufacturing PMI, with the reading at 51.2 for September, beating economists’ forecast for 50.2 in a Reuters poll, marking its highest level since May.
Rising new orders, including for exports, drove the improvement in production growth in September, the private RatingDog said.
The official non-manufacturing PMI, which includes services and construction, edged lower to 52.9 in September from 53 in the prior month, while the RatingDog general services PMI eased to 50 from 50.3.
Private surveys, previously conducted by Caixin and S&P Global, have painted a better picture than official polls over the previous years as they have focused more on export-oriented manufacturers.
The RatingDog private survey covers 650 manufacturers and collects responses in the second half of each month while the official PMI surveys a larger sample of over 3,000 companies at month-end.
A slate of economic data out of China in recent weeks has pointed to a slowdown in the world’s second-largest economy, with retail sales growth weakening for a third straight month and the consumer price index once again dipping into the negative territory, underscoring sluggish domestic demand.
Industrial profits recorded a double-digit jump in August from a year earlier as Beijing intensified efforts to rein in a supply glut and excessive price wars, easing the deflation in wholesale prices.
A meeting of China’s Politburo — composed of high-level members of the ruling Chinese Communist Party — in October is expected to offer some indication on Beijing’s economic policy plans in response to the slowdown in the third quarter, said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
“Since the GDP growth was above 5% in the first half-year, the government may tolerate the slowdown in H2 as long as it doesn’t jeopardize the full year growth target of 5%,” Zhang added.
China’s economy expanded by 5.3% in the first half year, putting the country on track to meet its full-year growth target of 5%.
Even though China’s economy has “defied doom-sayers” many times in the past, achieving an average growth of 4.5% from 2026 to 2035 will still be difficult, said Larry Hu, chief China economist at Macquarie, who estimates that China’s current GDP per capita, adjusted for inflation, is comparable to Japan’s in the late 1970s.
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