TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search results
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search resultsChinese factory activity slides as leaders seek spending boost
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
A worker monitors products for export at a packaging factory in Lianyungang, in China's eastern Jiangsu Province, on May 18, 2026. (AFP/STR)
C
hina's factory activity unexpectedly slid in July, official data showed Friday, as leaders in the world's second-largest economy struggle to reignite domestic demand.
The country's manufacturing sector has faced uncertainty this year due to the Middle East war, which has driven up global energy prices and disrupted shipping.
Booming exports underpinned by strong demand overseas for electronics and AI hardware have provided a lifeline as consumption at home remains weak.
The manufacturing purchasing managers' index (PMI), a closely watched gauge of industrial health, fell into contraction territory at 49.2, data by the National Bureau of Statistics showed Friday.
That was well below the 50.1 expansion forecast by a Bloomberg survey of economists, and also down from June's 50.3.
"Domestic weakness appears largely to blame – while the export orders index softened a bit, it remains relatively strong compared to the past few years," wrote Julian Evans-Pritchard of Capital Economics.
"The weakness will increase pressure on local governments to follow through on the Politburo's latest request for them to step up their spending," he said, referring to calls this week by a top decision-making body.
China's economy grew 4.3 percent year-on-year in the second quarter of 2026, the slowest pace in more than three years, official data showed this month.
The persistent slump in domestic spending, as well as a years-long crisis in the once-roaring property sector, have left Beijing reliant on exports to achieve growth.
The government's official growth target for this year is 4.5-5.0 percent -- the lowest in decades.
Xi notes 'challenges'
In another stark sign of woes, the official non-manufacturing PMI, which measures activity in sectors such as services and construction, fell sharply to 49.0 in July, the data showed Friday.
That contraction was the most pronounced in more than three years.
The reading indicated "a decline in the non-manufacturing sector's prosperity level" in July, said NBS statistician Huo Lihui in a statement.
Huo said the "main factors" for the slump were "significant declines" in activity across wholesale trade and monetary financial services, while the real-estate sector was also "below the critical point".
The lacklustre figures come one day after President Xi Jinping acknowledged "difficulties and challenges" facing the country's economy.
Xi said in a speech addressing leaders that in the second half of the year "we must enhance the effectiveness of macroeconomic policies [while] focusing on tapping the potential of domestic demand", according to state news agency Xinhua.
Messages from China's Politburo this week "suggest that the policy makers focus on the quality of growth rather than the speed", said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
"Acceleration of fiscal spending will be the key policy support" in the third quarter, he wrote, adding that "development of the new technology sector is on the top of the policy agenda".
