Official data: China’s manufacturing slump deepened as US tariffs and weak demand bite

China’s manufacturing downturn deepened in August as US tariffs and muted domestic demand continued to weigh on factory activity, official data showed.

The manufacturing purchasing managers’ index (PMI), released by the National Bureau of Statistics, inched up to 49.4 in August from 49.3 in July. Despite the marginal improvement, the index has remained below the 50-point threshold that separates expansion from contraction for five consecutive months, signalling persistent weakness across the sector.

New orders offered only faint signs of recovery, rising to 49.5 from 49.4, though still entrenched in contractionary territory. The sub-index for new export orders was little changed at 47.2 in August versus 47.1 a month earlier.

The data also underscored the fragility of China’s trade performance. Export growth slowed to its weakest pace in six months, dragged lower by a steep fall in shipments to the US. Exports to the US plunged 33% in August, marking a fifth straight month of double-digit declines. Even so, stronger sales to alternative markets have kept Beijing on track for a record annual trade surplus of more than $1.2 trillion.

In contrast, the non-manufacturing PMI — covering services and construction — returned to expansion, advancing to 50.3 from 50.1 after July’s dip below the key threshold.

The figures highlight the uneven nature of the current economic challenges facing China. Manufacturers face mounting headwinds from sluggish domestic consumption, government efforts to rein in cut-throat competition and overcapacity under the so-called “anti-involution” drive, as well as the protracted tariff dispute with Washington.

Written: Farid Muzaffar and Aiman Haikal