China Manufacturing Activity Picks Up in September 2025

Why this matters: These figures suggest a potential stabilization in China's manufacturing sector, which has been grappling with sluggish domestic demand and trade tensions. However, the official PMI still indicates contraction, highlighting ongoing challenges.

China's manufacturing sector has faced headwinds, including tepid domestic demand and higher U.S. tariffs. The official manufacturing PMI has remained below the 50-benchmark since April. Despite these challenges, the September data offers a glimmer of hope. The increase in the production sub-index and new orders suggests a potential turnaround.

Private surveys like RatingDog's have generally presented a more positive outlook than official polls, focusing on export-oriented manufacturers. However, broader economic data reveals a mixed picture, with retail sales growth weakening and consumer prices dipping into negative territory, underscoring the uneven recovery.

Looking ahead, a meeting of China's Politburo in October is expected to provide insights into Beijing's economic policy plans. While the government may tolerate a slowdown in the second half of the year, maintaining the full-year growth target of 5% remains a priority. Even with past resilience, achieving sustained growth in the coming years will be difficult, requiring significant reforms and adjustments.

The Purchasing Managers' Index (PMI) is an economic indicator derived from monthly surveys of private sector companies. A reading above 50 indicates expansion, while a reading below 50 suggests contraction.

The sector faces challenges including sluggish domestic demand, higher U.S. tariffs, and global trade disruptions. However, government efforts to curb industrial overcapacity and stimulate demand are underway.

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