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On October 21, 2025, Yantai Port in Shandong Province, China, was abuzz with the assembly and export of Chinese-made automobiles and construction machinery. This scene reflects China’s ongoing efforts to bolster its export activities even as its domestic market faces challenges.
A recent private survey has revealed a surprising contraction in China’s factory activity for November. As reported on Monday, this downturn highlights the persistent weakness in domestic demand, which continues to weigh heavily on the world’s second-largest economy.
The RatingDog China General Manufacturing PMI, conducted by S&P Global, recorded a decline to 49.9 for November, falling short of the anticipated 50.5 as per a Reuters poll. In PMI terms, a figure above 50 indicates expansion, while anything below signifies contraction.
This private assessment, which typically offers a more optimistic view than official reports due to its focus on export-driven manufacturers, has shown a notable deceleration from previous months, where it stood at 51.2 in September and 50.6 in October.
On a related note, the official manufacturing PMI released earlier on Sunday indicated that China’s factory activity had contracted for the eighth consecutive month in November, with a reading of 49.2. Despite this being an improvement from October’s figure of 49.0, it underscores the ongoing challenges within China’s manufacturing sector.
The official manufacturing PMI, released on Sunday, showed China’s factory activity shrank for an eighth month in November, coming in at 49.2, although marking a modest improvement from 49.0 in the prior month.
The RatingDog private survey covers 650 manufacturers and collects responses in the second half of each month, while the official PMI surveys a larger sample of over 3,000 companies at month-end.
“Manufacturing production growth came to a halt as new orders nearly stalled in November,” S&P Global and RatingDog said in a statement, despite a notable recovery in new export orders, which expanded at the quickest pace in eight months.
“Manufacturers reduced their workforce and purchasing volume, and became more cautious in inventory management,” said Yao Yu, founder of financial technology company RatingDog, amid a slowdown in new business growth.
Yu expects a “weak expansion” in factory activity in December as policymakers work toward the annual growth target of “around 5%.”
Separately, the official non-manufacturing PMI, comprising construction and services, fell to 49.5, marking the first contraction for the index since December 2022, the official data showed, dragged by weakness in the real estate and residential services sectors.
Economic downswing
The readings offered an early glimpse of how the economy fared in November after a slew of data showed the economic slowdown worsened in the final quarter of this year, amid a prolonged housing downturn and sluggish domestic demand.
Fixed-asset investment, which covers real estate, declined 1.7% in the first ten months of the year, levels unseen since 2020 when the pandemic hit. For October alone, fixed-asset investment fell 11.4% from a year earlier, the worst reading since early 2020.
Property investment extended declines, shrinking 14.7% in the first ten months, widening from 13.9% in the first three quarters.
Industrial output expanded 4.9% in October from a year earlier, while growth in retail sales slowed for a fifth straight month to 2.9%. Both marked their weakest levels since August 2024, according to LSEG data.
Signaling further economic malaise, China’s exports in October unexpectedly contracted for the first time in nearly two years, dropping 1.1% year on year, as businesses’ front-loading momentum tapered off.
The latest economic data suggested China’s growth is likely to decelerate further to below 4.5% in the fourth quarter, said Tommy Xie, managing director and head of Asia macro research at OCBC Bank, from the 4.8% expansion in the third quarter.
The economist pointed to the upcoming Politburo meeting and the Central Economic Work Conference later this month for policymakers’ signals on next year’s economic priorities.
Tensions with the U.S. have, however, eased after a temporary trade truce following President Donald Trump’s meeting with Chinese leader Xi Jinping in South Korea in late October.
Washington agreed to roll back steep tariffs on Chinese exports in exchange for Beijing cracking down on illicit fentanyl trade, pausing export controls of rare earths and resuming purchases of American soybeans. The U.S. also agreed to suspend for one year the port fees levied on Chinese vessels, as well as its plans to bar certain Chinese firms from its technology.
While the trade truce may help reduce the uncertainty, “a meaningful demand recovery is unlikely to come easily,” economists at Bank of America said in a note on Monday, as domestic consumption and investment remain under pressure and the policy boost on government funding for infrastructure investment has yet to kick in.
The Wall Street bank expects deflation risks to persist in the economy next year as “the aggregate demand [is] likely to stay sluggish for longer.”
Mainland China’s CSI 300 was up 0.36% on Monday while Hong Kong’s Hang Seng Index edged up 0.74%. The offshore yuan last traded at 7.0711 against the greenback.
