On October 21, 2025, Chinese-made cars and construction machinery will be assembled and shipped for export at Yantai Port in Yantai City, Shandong Province, China.
Cost Photo | Null Photo | Getty Images
China’s factory activity unexpectedly contracted in November as weak domestic demand continued to cast a shadow over the world’s second-largest economy, according to a private survey released on Monday.
S&P Global’s Rating Dog China Integrated Manufacturing PMI fell to 49.9 in November, below the 50.5 expected by analysts polled by Reuters. An indicator level above 50 suggests economic expansion, while below it suggests contraction.
Private surveys generally paint a better picture than official surveys because they focus on export-oriented manufacturing, but they suggested a slowdown from 51.2 in September and 50.6 in October.
The official manufacturing PMI released on Sunday showed China’s factory activity contracted for the eighth consecutive month at 49.2 in November, but was a slight improvement from 49.0 in the previous month.
RatingDog’s private survey covers 650 manufacturers and collects responses in the second half of each month, while the official PMI surveys a larger sample of more than 3,000 companies at the end of each month.
“New orders nearly stalled in November and manufacturing production growth stopped,” S&P Global and RatingDog said in a statement, even though new export orders rebounded markedly and expanded at their fastest pace in eight months.
Yao Yu, founder of financial technology firm RatingDog, said that as new business growth slowed, “manufacturers cut back on employees and purchasing volumes and became more cautious in managing inventory.”
Yu expects a “weak expansion” in factory activity in December as policymakers work toward an annual growth target of “about 5%.”
Separately, the official non-manufacturing PMI, which comprises construction and services, fell to 49.5, the first decline in the index since December 2022, dragged down by weakness in the real estate and housing services sectors, official data showed.
economic downturn
The figures provided an early glimpse into the economic situation in November, after a series of data showed the economic slowdown worsened in the final quarter of the year on the back of a prolonged housing recession and weak domestic demand.
Fixed asset investment, including real estate, fell 1.7% in the first 10 months of the year, the lowest level since 2020, when the pandemic began. Fixed asset investment in October fell by 11.4% compared to the same month last year, the worst figure since the beginning of 2020.
Real estate investment widened its decline, falling by 14.7% in the first 10 months, compared with 13.9% in the first three quarters.
Industrial production rose 4.9% in October compared to the same month last year, but retail sales growth slowed for the fifth consecutive month to 2.9%. According to LSEG data, both were at their lowest levels since August 2024.
China’s exports in October unexpectedly fell by 1.1% year-on-year for the first time in about two years, as companies slowed down in bringing forward their exports, a sign of further economic stagnation.
Tommy Xie, managing director and head of Asia macro research at OCBC Bank, said the latest economic indicators suggest China’s growth rate is likely to slow further to less than 4.5% in the fourth quarter, from a 4.8% expansion in the third quarter.
The economist pointed to the Politburo meeting and Central Economic Work Conference later this month as signals from policymakers on economic priorities for next year.
However, after President Donald Trump met with Chinese President Xi Jinping in South Korea in late October, a temporary trade ceasefire was established and tensions with the United States eased.
The U.S. government has agreed to lift high tariffs on Chinese exports in exchange for Beijing to crack down on illegal fentanyl trade, suspend rare earth export controls and resume purchases of U.S. soybeans. The United States also agreed to a one-year suspension of port fees on Chinese ships and a plan to ban certain Chinese companies from providing technology.
Economists at Bank of America said in a note Monday that while the trade truce may help reduce uncertainty, “a meaningful recovery in demand is unlikely to materialize easily” as domestic consumption and investment remain under pressure and additional government funding for infrastructure spending has not yet begun.
The Wall Street bank expects deflation risks to remain in the economy next year as “weak aggregate demand is likely to be prolonged.”
On Monday, mainland China’s CSI 300 rose 0.36% and Hong Kong’s Hang Seng Index rose 0.74%. The offshore yuan was most recently trading at 7.0711 yuan against the dollar.
