31.07.2025 01:51

China's manufacturing sector experienced a steeper-than-anticipated decline in July, according to official data released on Thursday. The contraction, revealed by a Manufacturing Purchasing Managers' Index (PMI) of 49.3, fell short of the 49.7 forecast by Reuters analysts. This disappointing figure marks the fourth consecutive month of contraction, underscoring ongoing economic headwinds.

This downturn follows a period of escalating trade tensions with the United States, which saw both nations impose significant tariffs on each other's goods in April. Although a temporary truce involving a rollback of most tariffs was agreed upon in May, set to expire in mid-August, recent high-level talks in Stockholm concluded without an extension announcement, despite widespread expectations. This lack of progress further dampens the outlook for the Chinese manufacturing sector.

Despite June's surprisingly strong 5.8% year-on-year increase in overall exports – more than compensating for decreased US exports – the July PMI indicates persistent weakness. A recent Politburo meeting highlighted the government's cautious approach, revealing no immediate plans for large-scale economic stimulus measures, although ongoing initiatives, such as subsidies to boost birth rates, continue. The absence of substantial government intervention adds to concerns about the manufacturing sector's future trajectory.

The disappointing July PMI data, coupled with the unresolved trade issues and the lack of significant stimulus, paints a challenging picture for China's manufacturing industry. This situation underscores the complex interplay between domestic economic factors and ongoing international trade relations. The report is a contribution from CNBC's Anniek Bao based on information from internet sources.