China’s manufacturing activity declines for second consecutive month – experts

Without additional support, the country's economic growth in the first quarter of 2026 is expected to be weak

Manufacturing activity in China likely declined for the second month in February, according to a Reuters poll of 27 economists.

Factory owners are still trying to turn a profit as weak domestic demand and investment offset steady exports.

Experts predict that the official Purchasing Managers’ Index (PMI) will fall to 49.1 in February from 49.3 in January, below the 50-point threshold that separates growth from contraction. In December, the PMI broke an eight-month streak of negative readings, rising to 50.1, but it remained negative for most of last year.

The survey has been adjusted for seasonality to reflect factory shutdowns during the Lunar New Year celebrations, which lasted from February 15 to 23. However, mass closures still distort the result.

Beijing refrained from introducing new stimulus measures in the fourth quarter of 2025, confident that China’s economy would reach its official growth target of around 5% for the year, thanks in particular to record exports.

However, economists expect that in the first quarter of 2026, China’s economic growth will be weak without additional policy support.

Chinese Premier Li Keqiang is expected to announce the official growth target for 2026 at the opening of the annual session of the national legislature on March 5. Experts surveyed by Reuters in January predict a slowdown to 4.5% and a continuation of this pace in 2027.

China is expected to make new commitments to reduce excess capacity. Xun Tiancheng, senior economist at the Economist Intelligence Unit, also predicts the gradual elimination of more industrial subsidies and the introduction of minimum prices in more industries.

It should be recalled that China increased its steel exports by 7.5% y/y in 2025 – to a record 119.02 million tons. Imports of steel products to the country in January-December last year amounted to 6.06 million tons, down 11.1% year-on-year.