According to a private-sector survey on Monday, China’s factory activity recorded its most rapid expansion in three months during February, with a reading of 50.8. The figure exceeded expectations from a Reuters poll of 50.3 and improved from January’s 50.1 and December’s 50.5.
This upturn was attributed to the return of millions of migrant workers post-Lunar New Year holiday. The private Caixin/S&P Global manufacturing PMI has persisted above the 50 mark, indicating expansion, since October.
This report follows the official manufacturing PMI released on Saturday, which similarly showed a significant rise in February’s factory activity to the fastest rate since November, with an increase to 50.2 from January’s 49.1. Meanwhile, the non-manufacturing PMI, covering services and construction, climbed slightly to 50.4 from 50.2.
Amid these positive indicators, economists caution that the new U.S. tariffs could strain China’s manufacturing sector and impact exports in 2025. This apprehension arises after President Donald Trump announced an additional 10% tariff on Chinese goods, complementing the existing 10% tariff applied as of February 4.
The added tariff is slated to take effect on March 4, coinciding with an annual political assembly in Beijing where economic goals and new policy support are expected to be disclosed.
The leadership of the world’s second-largest economy is anticipated to address the notable weakening in domestic demand and unveil fiscal stimulus measures to bolster growth amid escalating trade pressures. China’s commerce ministry has called for renewed dialogue with the U.S., while cautioning of retaliatory actions.
China’s economy continues to confront sluggish growth due to muted domestic demand and a prolonged real estate market slowdown, with exports remaining a critical growth pillar.
