Beijing: China’s factory activity showed a modest expansion for the second consecutive month in November, according to an official survey. This marks a positive trend as recent data suggests that a series of stimulus measures are finally making an impact on the world’s second-largest economy. The National Bureau of Statistics purchasing managers’ index (PMI) for November rose to 50.3, a seven-month high, up from 50.1 in October, surpassing the median forecast of 50.2 in a Reuters poll. The PMI reading remains above the crucial 50-mark that separates growth from contraction.
After several months of depressed sentiment, driven by falling producer prices and weak demand, the two consecutive months of positive PMI readings signal that the government’s economic stimulus measures may be starting to restore confidence on factory floors. However, uncertainties persist, particularly as fresh trade tensions with the U.S. could potentially dampen the recovery.
The industrial sector remains vulnerable to new U.S. tariffs, especially as former President Donald Trump has ramped up his trade threats ahead of his anticipated second term. On Monday, Trump reiterated his plan to impose a 10% tariff on Chinese goods to pressure Beijing into combating the trafficking of chemicals used in fentanyl production. He had previously suggested tariffs exceeding 60% during his presidential campaign, which could pose significant risks to China’s export-driven economy.
Despite recent export surges—attributed to factories rushing shipments ahead of expected tariffs—China faces a delicate balancing act. “The economy stabilized recently as fiscal and monetary policies eased after the Politburo meeting on September 26. But the outlook for 2025 remains unclear,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. He added that while fiscal stimulus could be expected, the scale and composition of the spending remain uncertain.
November’s PMI report showed a rebound in new orders, which expanded for the first time in seven months, although new export orders continued to contract, marking the seventh consecutive month of decline. This suggests a fragile recovery with insufficient demand remaining a key constraint on production.
“The PMI index continued to rise in November, indicating more obvious signs of recovery at the bottom of the economy,” noted Zhang Liqun, an analyst at the China Logistics Information Center. However, he cautioned that “insufficient demand is still a major constraint on enterprise production activities,” and stressed the need for stronger government-driven public investment to stimulate enterprise orders.
On the services side, the non-manufacturing PMI, which includes construction and services, dipped to 50.0 in November, down from 50.2 in October, with modest growth continuing in the services sector.
The Chinese government’s stimulus package remains central to supporting the economy, with a 10 trillion yuan ($1.38 trillion) debt relief package introduced earlier this month to ease municipal financing strains. Additionally, the central bank rolled out its largest stimulus since the pandemic in September, aimed at helping China achieve its 5% growth target for the year.
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Early signs of economic stabilization include a notable increase in retail sales, the largest since February, and a slowdown in the decline of property sales, which may suggest recovery in the struggling real estate sector. However, industrial output growth moderated slightly in October, and industrial profits continued to fall, reflecting the challenges firms face in maintaining profitability amidst ongoing economic pressures.
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The private-sector Caixin factory survey, due for release on Monday, is expected to show a slight uptick to 50.5, further suggesting that the manufacturing sector could be on the path to stabilization. China’s official November composite PMI, which encompasses both manufacturing and services, remained steady at 50.8.
