Official data from the National Bureau of Statistics released on Sunday showed the manufacturing Purchasing Managers’ Index ticked up slightly to 49.2 in November from 49.0 in October—matching analysts’ expectations but remaining below the 50-point threshold that separates expansion from contraction. The figures point to ongoing difficulty for manufacturers struggling to sustain a post-pandemic recovery amid escalating trade tensions with the United States.
Output was flat at 50.0, while sub-indexes for new orders and new export orders improved modestly but still remained in contraction territory.
Goldman Sachs economist Yuting Yang noted that although the sector continued to lose steam, Beijing may resist announcing major stimulus until at least the first quarter of 2025. “This year’s growth target appears broadly achievable,” the research note said. China has set its 2025 GDP growth goal at around 5%.
Traditional Growth Engines Lose Steam
China’s two long-standing levers for boosting economic activity—manufacturing for export and state-led infrastructure spending—have both weakened. A slowing global economy, a prolonged property downturn, and mounting local government debt have limited Beijing’s ability to rely on heavy investment or external demand to lift growth. These constraints have renewed calls for structural reforms aimed at fixing long-standing imbalances in household consumption and local government financing.
Still, there were some pockets of resilience. The PMI for small manufacturing firms rose to 49.1, a six-month high. According to Tianchen Xu, senior economist at the Economist Intelligence Unit, the improvement may reflect a degree of export resilience and the recent reduction of high U.S. tariffs by President Donald Trump.
Services Sector Cools as Holiday Effect Fades
The broader non-manufacturing PMI—which covers services and construction—slipped into contraction for the first time since December 2022, falling to 49.5 from 50.1.
Services activity dropped below 50 for the first time since September 2024, dragged down by cooling demand after October’s holiday boost faded.
“The business activity index for real estate and household services sectors both fell below 50, indicating subdued market activity,” said NBS statistician Huo Lihui.
Despite the slowdown, service providers remain optimistic. The sub-index measuring business expectations climbed to 55.9, suggesting companies anticipate an improvement in the months ahead.
Beijing Eyes Consumption Push Amid Trade Pressures
Policymakers have publicly acknowledged the need for reforms to tackle chronic supply–demand mismatches, strengthen household spending power, and address the debt burden weighing heavily on many provinces—some with economies comparable to entire nations.
But such reforms carry political and social risks, especially at a time when Trump's ongoing trade war has intensified external pressure on China’s economy.
In an effort to bolster demand, Beijing unveiled a new consumption plan last week focused on upgrading consumer goods in rural areas and stimulating niche sectors such as pet products, anime merchandise, and designer toy markets.
According to the EIU’s Xu, targeted fiscal support could deliver meaningful momentum:
“If the government can earmark a third of its consumption subsidies to the services sector in 2026, that would provide a great lift to the industry and its employment.”