Global
Official data released on Saturday revealed a contraction in China's manufacturing activity during October, marking the third decline within four months. At the Zhitong Machinery (Zhejiang) Co., Ltd. production line in Qianyiyuan town, Deqing city, Zhejiang province in eastern China, a slowdown in industrial output was observed, reflecting the broader sectoral deceleration. This slowdown is mainly attributed to weak domestic demand for goods, alongside early signs of a declining export momentum, prompting economists to call for broader government intervention to support economic growth. Data from the National Bureau of Statistics showed the official manufacturing Purchasing Managers' Index (PMI) dropped to 49.3 points in October from 50.1 points in September, below Reuters’ survey expectations of 50 points—the threshold between expansion and contraction. Notably, the first month of each quarter typically experiences a relative slowdown. Analyst Zhang Lichun warned that insufficient demand is increasing economic pressures and urged intensified stimulus efforts to offset the prolonged slump in consumer spending, which exports alone can no longer compensate. Although China’s trade surplus is set to surpass last year’s $1.2 trillion record, buoyed by strong exports, October saw a noticeable slowdown in foreign orders, especially those linked to the Christmas season, which had been shipped earlier in September. Domestic activity was also affected by a fading consumer spending momentum that had temporarily risen during the National Day holiday in early October but returned to stagnation afterward, pushing sub-indices for new orders, production, and purchasing into contraction territory. Despite the overall negative picture, sectoral performance was uneven, with advanced manufacturing and high-tech sectors maintaining positive momentum. Sub-indices for production and new orders in railways, shipbuilding, aerospace equipment, electronics, and telecommunications registered levels at or above 53 points, with strong growth in profits for companies linked to artificial intelligence technologies. Conversely, ongoing local market stagnation and rising costs continue to burden traditional industrial firms and those connected to the real estate sector, deepening the gap between old and new sectors in China’s industrial structure. Despite these sectoral challenges, analysts expect the Chinese economy to meet its annual growth target of 4.5% to 5% without necessarily requiring additional stimulus packages, supported by a recovery seen in the third quarter, which recorded 4.5% growth compared to 4.3% in the second quarter.
