China’s Manufacturing Activity Expected to Decline for the Fifth Consecutive Month in February

According to a Reuters poll conducted on Thursday, China’s manufacturing activity is anticipated to decrease for the fifth consecutive month in February. This trend may intensify calls for additional stimulus measures as factory owners grapple with challenges in securing orders both domestically and internationally.

The median forecast from 33 economists in the poll suggests that the official Purchasing Managers’ Index (PMI) is likely to have fallen to 49.1 in February, compared to January’s 49.2. A PMI reading below 50 indicates a contraction in manufacturing activity.

Despite some positive signs in December’s trade data and record-high new bank loans in January, economists remain cautious about the economy, acknowledging persistent challenges.

The official PMI data is scheduled for release on Friday, along with the private Caixin factory survey, which is also expected to show a slight decline in activity.

China’s post-COVID recovery has sparked concerns about the sustainability of its economic model, leading to expectations for policy reforms. Policymakers have committed to implementing additional measures to support growth, although analysts caution that Beijing’s fiscal capacity is limited.

In a recent move, the People’s Bank of China (PBOC) reduced the reserve requirement ratio for banks, injecting one trillion yuan in long-term liquidity to stimulate growth. President Xi Jinping has underscored the importance of supporting manufacturers through technology upgrades and reducing logistics costs to rebalance the economy and enhance productivity gains.



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