China's factory activity growth likely stagnated in July, as weak domestic consumption and cost pressures stemming from the Middle East conflict offset the positive contribution of robust global demand for Chinese goods, according to a Reuters poll published Wednesday. A survey of 31 economists conducted by Reuters forecast that the official manufacturing purchasing managers' index (PMI) would slip to 50.0 — the threshold separating expansion from contraction — down from 50.3 recorded the previous month. The data is scheduled for release by China's National Bureau of Statistics on Friday.
The anticipated stagnation reflects a deepening divergence within China's industrial sector. Manufacturers operating in high-tech segments have benefited this year from strong global appetite for AI-related products, while producers serving the domestic market have struggled with persistently tepid consumer demand. The broader macroeconomic backdrop reinforces concerns about the health of China's economy.
Gross domestic product in the second quarter expanded at its slowest pace in more than three years, weighed down by soft retail sales and weak investment. The sluggish growth figures have intensified expectations for additional supportive policy measures. Credit conditions have also remained tight, with growth in bank lending proving sluggish.
According to Reuters, the People's Bank of China has resorted to issuing window guidance to commercial banks, urging them to accelerate lending activity in recent months. Structural headwinds continue to dampen household confidence. Analysts note that a years-long slump in the housing market, combined with poor job security, has prompted Chinese consumers to prioritize saving over spending — a dynamic that policymakers must address to sustainably revive domestic demand.
Market participants are closely monitoring signals from the Politburo, which is due to convene by the end of July to discuss economic policy. However, analysts caution that sweeping stimulus measures are unlikely, with policymakers expected to focus instead on implementing existing tools, such as accelerating funding for infrastructure projects. The urgency for major stimulus has been tempered by a sharp acceleration in goods exports, which surged 27% year-on-year in US dollar terms in June, emerging as a primary driver of economic growth.
Industrial profits also continued to expand in June, recording a 15.1% year-on-year increase, though this represented a deceleration from the 21.1% growth posted the previous month. On the private sector side, the RatingDog manufacturing PMI, due for release on August 3, is expected to edge down to 51.5 from 51.7 in June, suggesting a modest but broader softening in manufacturing momentum. Source: Reuters poll of 31 economists, as reported by TBS News.
Source: tbsnews.net