Manufacturing Slump Deepens in China as Exports Drag

Beijing, August 1, 2025 - China’s manufacturing sector contracted further in July, revealing persistent weakness in both domestic and global demand. The S&P Global China General Manufacturing Purchasing Managers’ Index (PMI) declined to 49.5, down from 50.4 in June, below the 50‑point threshold that separates growth from contraction and missing analyst forecasts of 50.4.

This marks the fourth consecutive month of contraction, with new export orders falling for the 15th straight month, intensifying worries about China’s export reliance. Manufacturers responded by scaling back production, drawing down inventories, reducing staffing, and lowering selling prices - despite modest increases in input costs as authorities attempt to restrain price competition.

Export momentum has faded following earlier front‑loading ahead of anticipated U.S. tariff hikes, and domestic demand remains sluggish amid broader structural challenges, including weak consumer spending and a slowing property market.

The government has pledged support measures, such as assisting foreign trade firms and boosting consumption with initiatives like childcare subsidies. But deeper reforms - such as investment discipline, expanded social welfare, and a shift away from overcapacity - are seen as essential for long‑term stabilization.