China manufacturing activity declines first time in four months

• Published On: 27 January 2025 at 06:49

China's manufacturing activity fell in January for the first time in four months, according to official data released Monday, as Beijing struggles to maintain the recovery in the world's second-largest economy.

Policymakers have struggled to reverse a post-pandemic slump caused by a property crisis, low consumption, and high government debt.

According to the National Bureau of Statistics (NBS), the Purchasing Managers' Index (PMI) — a key measure of industrial output — was 49.1 in January, falling short of the 50-point threshold that distinguishes growth from contraction.

The reading fell from 50.1 in December, which marked the third consecutive month in positive territory after ending a six-month decline in October.


According to NBS statistician Zhao Qinghe, the January drop was "affected by the approaching Lunar New Year holiday and the concentrated return of business employees to their hometowns".

Zhao reported that production and demand slowed in the run-up to the eight-day public holiday from January 28 to February 4.

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"Economic momentum unexpectedly slowed in both manufacturing and service sectors ahead of the Chinese New Year," said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, in a note.


"Part of the slowdown may be due to weaker external demand, as the new export orders index dropped to the lowest level since March last year," Zhang pointed out.

In recent months, Beijing has announced a slew of aggressive measures aimed at boosting growth, including interest rate cuts, the lifting of home-buying restrictions, and the reduction of local governments' debt burden.

However, economists warn that more direct fiscal stimulus aimed at boosting domestic consumption is required to restore full health to the economy, which has struggled to recover since the Covid-19 pandemic.