China’s manufacturing sector shrank for the sixth consecutive month in September 2025, reinforcing signs of persistent economic headwinds. The official manufacturing PMI rose modestly to 49.8, but it still remained below the 50 threshold, which marks expansion. A private sector PMI, however, edged into growth territory at 51.2, hinting at uneven recovery.
New orders and production displayed incremental month-on-month improvement, though profit margins continued to be squeezed by intense price competition. Many firms remain cautious, citing weak domestic demand and rising materials costs. Observers noted constraints from both dwindling consumer sentiment and delays in resolving trade tensions.
Several underlying pressures have deepened this slump. The property sector continues to drag growth, while unemployment remains elevated. Across many provinces, discretionary spending remains weak. China’s central bank has held rates steady, even though hopes for a cut have risen in financial markets.
Export headwinds also cloud the outlook. The U.S.–China trade dispute remains unresolved, and uncertainty around tariffs has discouraged new investment in localized supply chains. Observers expect that unless Beijing pursues further stimulus or structural reform, growth may worsen in the coming quarters.
Still, some bright spots exist. China’s “new economy” sectors—such as AI, semiconductors, and digital services—are growing more strongly, supported by targeted policy and investment. The challenge will be to scale those gains while repairing traditional sectors.
