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China's Factory Activity Grows at Fastest Pace in Three Months Despite Tariff Uncertainty

February's manufacturing PMI data shows increased production and export orders, but rising costs and U.S. tariff threats loom over economic recovery.

A resident walks across a pedestrian overhead bridge as motorists clogged with heavy traffic on a city highway shrouded with pollution haze in Beijing, Saturday, March 1, 2025. (AP Photo/Andy Wong)
Employees work next to an empty production line at a garment factory in the organized industrial zone in Corum, Turkey, August 23, 2024. REUTERS/Cagla Gurdogan/File Photo
An employee works at a ceramics factory where the workers start their shifts before dawn to optimise sunlight and save energy, in Citta di Castello, Italy, August 30, 2022. REUTERS/Jennifer Lorenzini/File Photo
A general view of a manufacturing installation at the powders and explosives company Eurenco plant in Bergerac, southwestern France April 11, 2024. LUDOVIC MARIN/Pool via REUTERS/File Photo

Overview

  • The Caixin/S&P Global manufacturing PMI rose to 50.8 in February, indicating the fastest expansion in three months and surpassing forecasts of 50.3.
  • Official PMI data also showed growth, with February's reading at 50.2, up from 49.1 in January, signaling recovery after the Spring Festival holiday.
  • Export orders grew at their fastest pace since April 2024, but manufacturers faced rising input costs, particularly for materials like copper and chemicals.
  • U.S. President Donald Trump announced an additional 10% tariff on Chinese goods, set to take effect on March 4, raising concerns about trade tensions and export demand.
  • China's leadership is expected to unveil new economic policies this week to address slowing domestic demand, a struggling property market, and trade challenges.