China factory activity picks up but trade uncertainties weigh
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China’s factory production accelerated in February from the previous month, while total new orders increased at the quickest pace in three months.
PHOTO: AFP
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BEIJING – China’s factory activity grew at a faster pace in February, driven by stronger supply and demand including a rebound in export orders, and partly due to seasonal factors related to the holiday period, a private-sector survey showed on March 3.
The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rose to 50.8 in February from 50.1 the previous month, marking a three-month high and beating analysts’ forecasts in a Reuters poll of 50.3. The 50 mark separates growth from contraction. The PMI offers a snapshot of operating conditions in the manufacturing sector.
The positive trend in the Caixin survey aligned with official PMI data released over the weekend that showed manufacturing activity expanding at the fastest pace in three months.
“The holiday period saw robust consumption momentum, and technological innovations in certain industries added to the positive sentiment, helping sustain the manufacturing market recovery,” said Caixin Insight Group senior economist Wang Zhe.
Factory production accelerated in February from the previous month, while total new orders increased at the quickest pace in three months. New export orders increased at their fastest pace since April 2024.
However, manufacturers faced rising input costs, particularly for materials like copper and various chemicals, putting pressure on profit margins.
To mitigate these challenges, factory owners focused on cost-cutting. Employment in the sector continued to decline, and output prices remained subdued, reflecting weak pricing power.
Despite these pressures, business sentiment improved from January, buoyed by signs of recovering domestic demand and expectations of additional government support for the economy.
China’s economy grew 5 per cent in 2024, reaching the official target, largely due to extensive government stimulus measures. But the economy has been grappling with challenges, including a faltering property market, weakening domestic demand and rising trade tensions.
US President Donald Trump on Feb 27 said he would slap an extra 10 per cent duty on Chinese goods on March 4, on top of the 10 per cent tariff that he levied on Feb 4, worsening the trade outlook.
Caixin’s Mr Wang emphasised the importance of timely policy support, saying “March represents a critical policy window”.
“Supportive measures should address market expectations and societal concerns, focusing on key economic bottlenecks,” he said. REUTERS
