China’s manufacturing sector likely shrank for a sixth consecutive month in September, keeping pressure on Beijing to roll out further stimulus as trade talks with the U.S. drag on.
A Reuters poll of 32 economists showed the official purchasing managers’ index (PMI) edging up to 49.6 in September from 49.4 in August, but still below the 50 mark that separates expansion from contraction. The data is due Tuesday.
The prolonged downturn highlights structural challenges for the world’s second-largest economy. Domestic demand has struggled to rebound decisively in the years following the pandemic, while U.S. tariffs under President Donald Trump continue to squeeze Chinese manufacturers and their overseas buyers.
Forecasts ranged from a flat 50.0 by Maybank Investment Bank to 49.0 by Pantheon Macroeconomics, underscoring uncertainty over the sector’s outlook.
Policymakers rolled out consumer loan subsidies in mid-August, though retail sales and factory output data for that month still showed the weakest growth in a year. People’s Bank of China Governor Pan Gongsheng has pledged to use a range of policy tools to shore up the economy but has refrained from rate cuts, unlike the U.S. Federal Reserve.
Despite slowing momentum, officials have so far avoided large-scale stimulus, pointing to resilient exports and a stock market rally. Shipments to India, Africa, and Southeast Asia are set for record highs this year, though none match the U.S., where China exports goods worth over $400 billion annually, about 14% of its total.
Trade talks remain a key risk. Chinese President Xi Jinping spoke with Trump on September 19, the first direct contact in three months, but discussions on TikTok, a sticking point in broader negotiations remain unresolved. Technical disagreements resurfaced during follow-up meetings last week ahead of October’s Madrid summit.
A separate private survey, the RatingDog PMI, is forecast at 50.2 for September, down from 50.5 in August, suggesting modest growth in smaller and export-oriented firms.
