Manufacturing Contractions in China: The Impact on the Economy and Upcoming Policy Changes

The manufacturing sector in China is currently facing challenges, with factory activity contracting for the second month in a row. Despite this, the official manufacturing purchasing managers’ index for June remained at 49.5, the same as in May. A reading below 50 indicates contraction in activity, while a reading above 50 signifies expansion.

Meanwhile, the new manufacturing export order subindex was also unchanged at 48.3 in June. On the other hand, the non-manufacturing PMI, which measures sentiment in the service and construction sectors, fell to 50.5 from 51.1 in May, but still remains in expansion territory for the sixth consecutive month.

The upcoming third plenum, where top Communist Party officials will convene in Beijing in two weeks, is anticipated to unveil major economic strategies for the next five to 10 years. This delayed meeting comes at a crucial time when China is facing challenges in its manufacturing sector and overall economy.