BEIJING: China’s factory activity dropped in October, its third contraction in four months, a government survey showed on Saturday, hurt by soft demand for goods at home as well as signs of weakness in exports.
Economists called on the government to do more to support growth after the figures, which highlighted how exports, which have powered higher for much of this year, may not have sufficient strength to offset long-stagnant consumer spending. “Insufficient demand is increasing downward pressure on the economy,” said Zhang Liqun, an analyst with the China Federation of Logistics & Purchasing. The official manufacturing purchasing managers’ index (PMI) fell to 49.3 from 50.1 in September, according to data from the National Bureau of Statistics.
That missed a forecast for 50.0 from a Reuters poll, though the first month of a quarter is typically the weakest. China’s trade surplus with the world is on track to top last year’s USD1.2 trillion due to strength in exports. But in October, factory activity weakened as overseas Christmas-related orders, which were front-loaded in September, cooled. It was also hurt when consumer spending, which climbed during China’s long National Day holiday in the first week of October, fizzled out. Sub-indexes for new orders overall and for new export orders both stayed in contraction territory in October. Production and purchasing activity also slipped into contraction from expansion.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, said that if external demand weakens in 2027, “China will need more significant policy support to boost domestic demand.” Lu Zhe, chief economist at Soochow Securities, called for expanding subsidies for mortgage interest payments “to shore up household confidence and anchor sentiment.”
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