China's manufacturing activity slips in January
What's the story
China's manufacturing sector has hit a rough patch, with the official Purchasing Managers's Index (PMI) for January dropping to 49.3. The decline indicates contraction in the sector and is lower than expert predictions, though December's figure was slightly higher at 50.1. Despite this setback, factories continue to operate at a steady pace, with the production index remaining at 50.6.
Sector performance
Equipment manufacturing sector remains stable
Despite the overall slowdown, some sectors are showing resilience. The high-tech manufacturing sector has picked up speed, with a PMI of 52.0, while the equipment manufacturing sector has remained stable. However, new orders have slipped to 49.2 as demand continues to cool off amid a persistent domestic consumer slump in China.
Policy initiatives
Beijing plans new policies to boost demand
In response to these challenges, Beijing is planning new policies aimed at boosting demand and keeping the economy moving. The announcement is expected in March, coinciding with the release of China's latest five-year plan. Despite a slower GDP growth of just 5% last year and fewer new orders, production has continued at a steady pace in certain sectors.
Economic balance
China recorded $1.2 trillion trade surplus last year
China recorded a massive $1.2 trillion trade surplus last year, helping to balance out the slower domestic demand. The country's economy grew by 5% in 2025, one of its slowest growth rates in decades. Leaders are expected to announce a similar growth target for this year at a key annual political gathering in March, as part of their long-term economic strategy.