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 manufacturing activity contracted more than expected in October to its lowest level in six months, an official survey showed on Friday, as trade tensions with Washington flared up during the month.
According to data from the National Bureau of Statistics, the Manufacturing Purchasing Managers’ Business Index came in at 49.0, lower than the 49.6 expected by economists polled by Reuters. A value above the indicator 50 indicates growth, and a value below it suggests contraction.
The PMI rose to a six-month high of 49.8 in September, compared with 49.4 in August and 49.3 in July, but the latest data reverses the recovery of recent months.
Official data showed sub-indices tracking production, new orders, raw material stocks and employment all contracted further, pointing to a deepening slowdown in manufacturing and weakening demand.
The non-manufacturing PMI, which includes construction and services, rose to 50.1, supported by renewed momentum in air and rail transport, accommodation, and cultural and sports-related entertainment activities. In October, there was an 8-day Golden Week holiday from October 1st to 8th.
According to Wind Information, the NBS composite manufacturing/non-manufacturing PMI fell to 50, the lowest level since December 2022.
NBS chief statistician Huo Lihui blamed the economic slowdown on a week-long holiday in which most factories in China were closed, and an “increasingly complex international environment.”
Manufacturing activity in the country has been shrinking since April, when US President Donald Trump launched a tariff campaign to put pressure on Chinese factories.
China’s economy expanded by 4.8% in the third quarter, the slowest growth in a year. In addition to economic constraints, fixed asset investment unexpectedly fell by 0.5% in the first nine months of this year, the first decline since the pandemic-hit 2020, according to Wind Information data dating back to 1992.
Profits at major industrial companies posted their biggest jump in nearly two years, rising 21.6% in October from a year earlier. This was as the decline in factory prices eased amid a fierce price war and the Chinese government’s campaign to rein in overcapacity.
Domestic demand remains sluggish, with the prolonged real estate recession and weak labor market conditions eroding household purchasing power.
After months of heightened tensions, China and the United States agreed to a trade ceasefire on Thursday, calming a situation that threatened to plunge the world’s two largest economies into a full-blown trade war.
President Trump said the United States would immediately cut in half its 20% fentanyl tariffs on Chinese goods, and in exchange, Beijing would resume purchasing “large quantities” of American soybeans and other agricultural products. China also agreed to suspend broad rare earth regulations for one year while taking steps to stem the flow of precursor chemicals used to make fentanyl. Both sides agreed to suspend fees for ships docking at each other’s ports for one year.
But analysts warned that the talks fell short of a comprehensive deal that would address core issues in the U.S.-China conflict and other contentious issues, including Taiwan, and that the deal risked re-escalating the delicate détente.
“With the successful conclusion of trade negotiations yesterday, China’s macro policy will remain unchanged for the rest of this year,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, adding that he expects more aggressive fiscal policy early next year.
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