Overview
- The National Bureau of Statistics' July release on Friday showed the manufacturing PMI fell to 49.2 and the non‑manufacturing PMI to 49.0, with the composite index at 49.3, all below the 50 threshold for expansion.
- Demand gauges weakened sharply: the new orders subindex dropped to 48.5 and new export orders fell to 49.6, marking a pullback in both domestic and external demand.
- Policymakers acknowledged economic 'difficulties and challenges' at a mid‑year Politburo meeting and pledged to speed fiscal spending, but officials and analysts say they will favour incremental, implementation‑focused tools over broad stimulus.
- Exports have propped up growth this year—June shipments jumped about 27% year‑on‑year—but that surge was partly driven by frontloading ahead of U.S. tariff moves and shows early signs of easing while higher energy and shipping costs raise manufacturers' pressures.
- The slump reinforces structural risks from a weak property sector, slow lending and job insecurity for households and makes upcoming private PMI readings and the details of new infrastructure and financing steps key near‑term indicators.