Beijing, June 30, 2025 – Factory activity in China edged upwards in June but stayed in contractionary territory for a third straight month, as the country battles soft demand and the effects of a trade war with the United States.
China’s official purchasing managers’ index (PMI) – a gauge of manufacturing activity – rose to 49.7 in June from 49.5 in May and 49.0 in April, the National Bureau of Statistics announced on Monday.
Scores above 50 indicate growth in manufacturing while readings under 50 suggest a contraction.
The improved results came after Beijing and Washington took steps to de-escalate their unprecedented tariff war in mid-May, with analysts noting that China’s vast export sector appeared to have regained some momentum.
The new orders sub-index rose to 50.2 in June from 49.8 in May, “indicating that manufacturing market demand has improved”, the bureau said. A sub-index for new export orders rose to 47.7 from 47.5 the previous month.
“The economic momentum is stable due to strong exports. High-frequency data suggests that exports may have strengthened in recent weeks,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.
Zhang added that Beijing was likely to hold off on implementing more supportive monetary policy changes due to the uptick.
“The policymakers will likely wait and monitor the development of the trade war,” he said, noting that a meeting of China’s Politburo scheduled for July would shed further light on how the country’s leaders are feeling about the state of the economy.
China’s exports have so far shown resilience in the face of the US trade war, with front-loading and strong growth in shipments to alternative markets helping to offset a decline in demand from America.
But the world’s second-largest economy is also battling several other headwinds, including a prolonged property market downturn and persistent deflationary pressure.
The non-manufacturing commercial activity PMI, which includes services and construction, rose to 50.5 in June from 50.3 the previous month, according to the bureau.
Despite the recent rebound in manufacturing and construction, research firm Capital Economics said it remained “cautious about the outlook” for China’s economy, as “weaker export growth and a fading fiscal tailwind is likely to slow activity in the second half of the year”.
Another index, the Caixin manufacturing PMI, is expected to report a reading on Tuesday in what would be a “delayed response” to the US-China tariff reduction announced in mid-May, Goldman Sachs said in a research note issued before Monday’s data release.
The Caixin PMI focuses on smaller, export-oriented, and private firms.
After raising import levies past a prohibitively high 100 per cent in April, China and the US brought the duties down through negotiations in mid-May and reached an agreement on export controls last week.
China’s industrial profits fell by more than 9 per cent in May compared with the same month in 2024, according to data released on Friday, reflecting in part what analysts called shocks from the US-China tariff dispute. (South China Morning Post)
