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yesterday

China’s Manufacturing PMI Dips to 49.3 Ahead of Tariff Truce Deadline

July’s reading missed forecasts of a modest rebound, intensifying factory sector strain with the U.S. tariff rollback ending in mid-August.

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A worker works on a production line at a factory of a ship equipments manufacturer, in Nantong, Jiangsu province, China March 2, 2020. China Daily via REUTERS/ File Photo
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China has struggled to maintain a strong economic recovery since the pandemic, as it fights a debt crisis in the crucial property sector, chronically low consumption and elevated youth unemployment

Overview

  • July’s manufacturing PMI stood at 49.3, marking its fourth straight month below the 50-point expansion threshold and falling short of the 49.7 Reuters poll forecast.
  • The 90-day U.S.-China tariff rollback agreed in May is set to expire in mid-August after negotiators in Stockholm failed to secure an extension.
  • China’s exports rose 5.8% year-on-year in June, partly offsetting weak domestic orders but showing signs of slowing as higher U.S. duties loom.
  • At its recent Politburo meeting, China’s leadership opted against broad stimulus measures and instead expanded subsidies to encourage childbirth.
  • Ongoing factory contraction reflects the combined impact of elevated trade tensions, soft internal consumption and long-term demographic headwinds.