China’s Manufacturing Activity Sees Uptick in September Despite Official PMI Contraction
Electric Vehicle Production in China Sees a Revival Amid Economic Challenges
China’s Manufacturing PMI Shows Signs of Recovery
In May 2025, at Zeekr’s electric vehicle factory in Ningbo, China, a worker inspects a finished vehicle, highlighting the ongoing activity within the industry. Recent data published by the National Bureau of Statistics indicates that China’s manufacturing activity contraction was less severe than anticipated in September. The Manufacturing Purchasing Managers’ Index (PMI) came in at 49.8, slightly above the predicted 49.6, and marked the best performance since March, despite remaining below the 50-point threshold that distinguishes growth from contraction.
Factors Influencing the Manufacturing Sector
China’s manufacturing activity has been under pressure since April due to lukewarm domestic demand and increased U.S. tariffs impacting exports. Nevertheless, the sub-index for production climbed to a six-month peak of 51.9, and new orders rose to 49.7. Additionally, manufacturers’ inventories increased to 48.5, signaling a slower depletion of stockpiles. Notably, the boost in production was driven by sectors such as equipment manufacturing, high-tech, and consumer goods, as Lihui Huo, chief statistician at the National Bureau of Statistics, stated.
Private Surveys Indicate a More Optimistic Outlook
The private firm RatingDog reported a manufacturing PMI of 51.2 for September, surpassing the forecast of 50.2 and achieving its highest level since May. This improvement was attributed to growing new orders, including exports. Contrarily, the official non-manufacturing PMI, incorporating services and construction, slightly declined to 52.9 from 53, whereas the RatingDog services PMI dipped to 50 from 50.3. RatingDog’s results, focusing on 650 manufacturers, are often more positive as compared to official statistics, which assess over 3,000 companies.
Economic Indicators Reflect Challenges Amid Efforts to Boost Growth
A recent wave of economic data from China suggests a slowdown in the world’s second-largest economy, as evidenced by falling retail sales growth and consumer price indexes entering negative territory, indicating weak domestic demand. Despite these challenges, industrial profits soared in August, fueled by Beijing’s measures to combat supply surplus and fierce price competition, which alleviated deflationary pressures on wholesale prices.
Strategies for Sustained Economic Growth in China
The forthcoming October meeting of China’s Politburo, which includes key figures from the ruling Chinese Communist Party, is anticipated to reveal plans for addressing the economic deceleration in the third quarter, according to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. Despite a 5.3% economic expansion in the first half of the year, the government is likely to accept a moderated growth rate for the latter half to ensure meeting the annual 5% growth target.
Although China has historically surpassed pessimistic forecasts, achieving an average growth rate of 4.5% from 2026 to 2035 remains challenging. Larry Hu, chief China economist at Macquarie, points out that China’s inflation-adjusted GDP per capita parallels Japan’s in the late 1970s, highlighting the ongoing economic hurdles.
