(Bloomberg) — China\u2019s factory activity slumped for the longest streak in more than nine years, prompting fresh calls for greater policy support even as the country reached a trade truce with the US.<\/p>\n
The official manufacturing purchasing managers\u2019 index fell more than expected to 49 in October, suggesting activity dropped the most in six months just before a leaders\u2019 meeting stabilized ties this week. New orders shrank the most since 2023 as demand took a hit from trade barriers and weak sentiment at home.<\/p>\n
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\u201cIt is a discouraging start to the fourth quarter,\u201d said Lynn Song, chief Greater China economist at ING Bank NV. The data released Friday is \u201ca reminder that policy support is still needed\u201d to shore up areas of weakness in the economy.<\/p>\n
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Huo Lihui, a statistician at the National Bureau of Statistics, blamed the sluggish activity on the fewer working days in October because of national holidays and \u201cincreased complexity in global environment.\u201d Tensions between the world\u2019s largest economies escalated that month over export controls, with US President Donald Trump threatening additional 100% tariffs on imports from China.<\/p>\n
The output sub-index fell below the 50 mark that separates contraction from growth for the first time since April, when Trump unleashed his so-called Liberation Day tariffs. The new export order sub-index also recorded its worst reading since then.<\/p>\n
What Bloomberg Economics Says…<\/p>\n
\u201cDespite the soft data, more stimulus in the fourth quarter looks unlikely. Improving external environment \u2014 helped by recent trade agreements with the US \u2014 and progress toward meeting the growth target reduce the need for additional easing.\u201d<\/p>\n
\u2014 Chang Shu and Eric Zhu<\/p>\n
Read the full note here.<\/p>\n
Given the broad slowdown in factory activity, manufacturers will likely find relief from the deal reached between Trump and Chinese President Xi Jinping that reduced tariffs on made-in-China products. But weak domestic demand and uncertainties in US-China relations will continue to cast a shadow over their outlook.<\/p>\n
The non-manufacturing measure in construction and services inched up to 50.1. Unlike factories, the services sector probably benefited from the eight-day National Day holidays.<\/p>\n
Some Chinese exporters who spoke with Bloomberg News expressed optimism the deal will boost orders for their goods, although that prospect no longer excites them as it once did. Many said they\u2019ve learned their lessons from Trump\u2019s trade brinkmanship and now realize they can\u2019t rely solely on access to the world\u2019s biggest consumer market.<\/p>\n
With net exports making up nearly a third of China\u2019s growth this year, these companies\u2019 ability in finding new customers outside the US has helped put the economy on track to reach the annual expansion target of around 5%. However, many analysts predict the final three months of 2025 will see the slowest performance since zero-Covid lockdowns roiled production in 2022.<\/p>\n
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\u201cThe latest result from the Trump-Xi summit may provide some positives going forward. But policy support will be necessary to stop the deteriorating momentum,\u201d said Zhaopeng Xing, senior China strategist at Australia & New Zealand Banking Group.<\/p>\n
China already injected additional stimulus worth 1 trillion yuan ($141 billion) since late September, including unused bond quota for provinces to expand investment and repay arrears owed to companies, as well as new funding for policy banks to spur investment.<\/p>\n
The People\u2019s Bank of China is still expected to cut its policy interest rate and lower the amount of cash banks need to set in reserves, which would unleash liquidity, based on Bloomberg\u2019s survey of economists this month.<\/p>\n
Looking over the next five years, Beijing has made clear it plans to keep tech and manufacturing as the top priorities even as it pledged to \u201csignificantly\u201d boost the share of consumption in its economy.<\/p>\n
Officials plan to take \u201cextraordinary measures\u201d to achieve breakthroughs in core technology and strengthen export controls, according to a readout from a key policy meeting in October that discussed China\u2019s next five-year plan.<\/p>\n
\u201cThe reality of a bifurcated global landscape is now undeniable,\u201d said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong. Both investors and manufacturers need to \u201cadjust and strategically align themselves to succeed in a new world order where the US and China stand as dominant technological powers within their respective spheres of influence.\u201d<\/p>\n
(Updates with additional detail and comments throughout.)<\/p>\n
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\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — China\u2019s factory activity slumped for the longest streak in more than nine years, prompting fresh calls…\n","protected":false},"author":3,"featured_media":345438,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[3638,64,74,79,158038,41635,17909,22701,5005,117450,67,132,68],"class_list":{"0":"post-345437","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bloomberg","9":"tag-business","10":"tag-china","11":"tag-economy","12":"tag-export-controls","13":"tag-greater-china","14":"tag-national-bureau-of-statistics","15":"tag-policy-support","16":"tag-president-donald-trump","17":"tag-trade-barriers","18":"tag-united-states","19":"tag-unitedstates","20":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115468562912721568","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/345437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=345437"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/345437\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/345438"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=345437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=345437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=345437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}