China's manufacturing sector contracted for the sixth consecutive month in September, as new US tariff measures weighed on exports and fragile domestic demand continued to limit growth. The prolonged downturn underscores the mounting pressure facing the world’s second-largest economy.
The official Purchasing Managers' Index (PMI) edged up to 49.8 in September from 49.4 in August, marking the highest level in six months but still below the 50-point mark that separates expansion from contraction. Over the six-month period of contraction, the PMI has averaged 49.6, highlighting the persistence of manufacturing weakness.
The downturn coincides with rising trade tensions following US tariffs on Chinese imports, imposed earlier this year. Negotiations aimed at mitigating the impact of the measures are scheduled for late October, with both sides seeking to avoid deeper disruptions to global supply chains.
Until then, manufacturers remain squeezed between weak domestic demand and a more uncertain export market, leaving a precarious outlook for the remainder of 2025.
Economists noted that while the small uptick suggests some stabilization, it falls short of signaling a meaningful recovery. Both new orders and export demand remain under pressure from heightened trade uncertainty.
Despite clear signs of industrial slowdown, Beijing has refrained from launching major stimulus packages. Authorities continue to emphasize confidence in a gradual economic rebound in the coming quarters.
People’s Bank of China Governor Pan Gongsheng reiterated that policymakers still have a "range of monetary tools" available to cushion the economy if conditions deteriorate. However, the PBoC has not mirrored the US Federal Reserve's recent rate cut – a move that many analysts argue could help encourage spending and investment to soften the current slowdown.