Manufacturing activity in China declined for the second straight month during February, though potential changes in U.S. trade policy could offer modest improvements ahead.
Government data released Wednesday showed China’s official manufacturing purchasing managers index dropped to 49 in February, down from January’s reading of 49.3, marking a four-month low according to the National Bureau of Statistics. This monthly survey of factory managers uses a 100-point scale where readings below 50 indicate declining activity.
After breaking an eight-month streak of manufacturing declines with a December reading of 50.1, the recent drop back into negative territory reveals continued struggles in the sector amid weak domestic spending and consumer demand.
National Bureau of Statistics chief statistician Huo Lihui blamed the weaker numbers on seasonal influences, including the nine-day Lunar New Year celebration that occurred in mid-February.
However, a competing survey from private research firm RatingDog painted a brighter picture, showing February manufacturing activity at 52.1, up from 50.3 the previous month. This marked the strongest expansion since December 2020, with the private survey typically reflecting conditions at smaller, export-oriented companies.
RatingDog founder Yao Yu noted in his analysis that international demand strengthened significantly in February, with new export orders showing notable growth.
“The mixed bag of manufacturing PMI data suggests a similar trajectory to what we observed in 2025,” wrote Lynn Song, ING Bank’s chief economist for Greater China. “Resilient external demand (is) continuing to drive growth, while domestic demand has been disappointingly soft.”
Capital Economics China economist Zichun Huang suggested that last month’s Supreme Court decision striking down Trump’s reciprocal tariffs, leading to reduced U.S. tariffs on Chinese goods, should provide a “small boost” to exports and factory activity in coming months.
The planned April meeting between U.S. President Donald Trump and Chinese leader Xi Jinping, which could result in an extended trade agreement between the nations, may also benefit Chinese manufacturers.
Analysts warned that China’s weak domestic demand will likely persist as problems in the real estate sector continue to hurt consumer spending and business investment.
China plans to announce its economic growth target this week during its annual national congress beginning Thursday, with economists predicting a target of 4.5% or higher.
The week-long congressional session will also approve Beijing’s policy framework for 2026-2030, expected to emphasize technological development and reducing dependence on foreign suppliers.
