BEIJING — China’s manufacturing sector likely edged back into growth territory in June, though just barely, as the country’s massive economy continues to struggle for traction despite a surge in high-tech exports fueled by worldwide investment in artificial intelligence.
A survey of 23 economists conducted by Reuters projected that China’s official purchasing managers’ index — a key gauge of factory activity — would tick up to 50.1 from 50.0 in May. Any reading above 50 signals expansion, while anything below that mark indicates contraction. The official figures are set to be released Tuesday.
A wave of global AI investment has helped China, the world’s leading manufacturer, absorb an export blow that many analysts had anticipated from instability in the Middle East. However, there are growing signs that the stockpiling of goods tied to higher energy costs is beginning to wind down. Prices have been climbing, and buyers overseas are starting to draw down their existing inventories. At the same time, spending within China itself remains sluggish.
Among the economists surveyed, the Economist Intelligence Unit offered the most optimistic projection at 50.4, while Moody’s Analytics submitted the most pessimistic estimate at 49.7.
Xu Tianchen, a senior economist at the Economist Intelligence Unit, pointed to a notable trend in recent weeks. “We spotted trade frontloading in June,” he said. “Exporters accelerated shipments due to U.S. trade policy uncertainty. Late July will be a big moment for them because new U.S. Section 301 tariffs will kick in by then.”
Industrial profit data released Saturday painted a mixed picture: companies in upstream sectors and the computer industry posted sharp gains, while manufacturers further down the supply chain remained under strain as a prolonged crisis in the property market continues to suppress consumer spending across the $20 trillion economy.
Adding to concerns about weak demand, China’s central bank has reportedly directed certain commercial banks to ramp up their lending this month, according to people with knowledge of the situation. The move is seen as the latest indicator that appetite for credit remains soft as the country wrestles with lackluster domestic consumption.
Strong export performance helped China’s economy beat expectations in the first quarter of the year, but more recent data suggests that growth is becoming increasingly dependent on chips and semiconductors. The most current trade figures show that exports of automated data processing equipment jumped more than 60% compared to the same period last year, while shipments of other products — such as furniture — climbed just 1.9%.
The domestic picture offers little relief. Retail sales in May dropped for the first time in more than three years, and the decline in new home prices has been accelerating, according to the latest available data.
A separate private-sector survey of factory activity, the RatingDog index, is expected to dip to 51.6 from 51.8, with those results due out Wednesday.
