HONG KONG (AP) — China’s manufacturing sector contracted for the second consecutive month in February, reaching a four-month low despite potential relief from recent U.S. tariff reductions. The official manufacturing purchasing managers index (PMI) declined to 49 from January’s 49.3, according to Wednesday’s report from the National Bureau of Statistics. The PMI scale operates from 0 to 100, with readings below 50 indicating economic contraction.
The recent downturn follows December’s brief expansion at 50.1, which interrupted eight consecutive months of contraction. National Bureau of Statistics chief statistician Huo Lihui attributed the February decline to seasonal factors, particularly the extended Lunar New Year holiday period in mid-February.
Contrasting with government data, a private sector PMI survey by Chinese financial research firm RatingDog presented a more optimistic outlook. Their February reading reached 52.1, up from January’s 50.3, marking the most significant expansion since December 2020 and remaining firmly in growth territory. This private survey typically captures trends among smaller, export-oriented private enterprises more accurately.
RatingDog founder Yao Yu noted in a statement that overseas demand demonstrated notable strength in February, with new export orders showing substantial growth. The divergent data patterns reflect what ING Bank’s Greater China chief economist Lynn Song described as “a similar trajectory to what we observed in 2025,” with resilient external demand driving growth while domestic consumption remains disappointingly soft.
Economists identify potential catalysts for improvement in the coming months, including last month’s Supreme Court ruling against reciprocal tariffs that resulted in reduced U.S. duties on Chinese goods. Capital Economics China economist Zichun Huang projected this would provide a “small boost” to exports and manufacturing activity. Additionally, the anticipated April meeting between U.S. President Donald Trump and Chinese leader Xi Jinping could extend the current trade truce between the nations.
However, analysts caution that domestic demand weaknesses persist, fueled by an ongoing real estate sector downturn that continues to suppress consumption and investment. Attention now turns to China’s annual national congress beginning Thursday, where officials will unveil economic growth targets—with economists anticipating a goal of 4.5% or higher—and approve Beijing’s five-year policy blueprint for 2026-2030, expected to emphasize technological advancement and self-reliance initiatives.