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China's Factory PMI Slips to 49.3, Extending Fourth Month of Contraction

Stalled talks to extend a U.S. tariff pause leave the truce expiring in mid-August without new policy lifelines.

Overview

  • China’s official manufacturing PMI fell to 49.3 in July, marking a fourth straight month of contraction in factory activity.
  • Negotiations in Stockholm failed to prolong the 90-day tariff suspension agreed in May, setting its expiration for mid-August.
  • New export orders remained in contraction even though overall exports rose 5.8% year-on-year in June, signaling fading benefits from the tariff pause.
  • NBS statistician Zhao Qinghe cited the traditional off-season and weather disruptions—high temperatures, heavy rains and floods—as key drivers of July’s downturn.
  • A recent Politburo meeting produced no announcements of substantial new stimulus despite mounting export and domestic demand headwinds.