China's manufacturing activity contracted for a second straight month in February, an official survey showed on Wednesday, suggesting factory owners are still struggling to turn a profit as weak domestic demand and investment offset resilient exports.
The official purchasing managers' index (PMI) fell to 49.0 in February from 49.3 in January, a 4-month low, the National Bureau of Statistics' survey showed. It remained below the 50-mark separating growth from contraction, and missed a median forecast of 49.1 in a Reuters poll.
The non-manufacturing purchasing managers' index (PMI), which includes services and construction, picked up to 49.5 from 49.4 in January.
The survey is seasonally adjusted to reflect factory shutdowns around the Lunar New Year holiday, which ran for a record nine days from February 15 to February 23 this year, but economists say the model is imperfect, meaning the widespread closures still skew the result.
Policymakers held off on fresh stimulus in the final quarter of 2025, confident the world's second-largest economy would meet its official growth target of around 5% off the back of record exports and a drive to diversify away from the United States, in response to President Donald Trump's tariffs.
But economists expect growth to stay weak in the first quarter of 2026 without further policy support.
They say steps such as targetted interest-rate cuts and further cuts in banks' reserve requirements are unlikely to help boost growth, after similar easing measures delivered only limited gains since the end of the COVID-19 pandemic.
China's Premier Li Qiang is expected to announce the official 2026 growth target at Thursday's opening of the annual session of the national legislature.
Economists polled by Reuters in January forecast growth slowing to 4.5% this year and keeping that pace in 2027.
The Politburo, the Communist Party's top decision-making body, pledged more proactive and effective economic policies last week, highlighting efforts to stabilise employment and boost domestic demand.
Policymakers are expected to make fresh pledges to curb overcapacity when Premier Li delivers the government's work report and next five-year plan on Thursday, which will outline priorities for the coming year.
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