China Factory Activity Shrinks Second Straight Month at 49.8

China’s manufacturing PMI stayed in contraction at 49.8 in August, suggesting only tentative stabilisation amid slowing demand and a property downturn. The broader economy slowed to 4.3% growth in Q2, with consumer spending, urban investment, and unemployment under additional pressure, though exports have helped cushion the impact amid strong global AI infrastructure demand. Outbound shipments have continued to grow double digits for much of the year, reflecting resilience in high-tech exports even as domestic momentum wanes. Analysts widely anticipate a renewed contraction in August factory activity, with forecasts around 49.6, underscoring persistent headwinds and limited room for robust policy support. The government has pledged timely measures and potential fiscal and monetary easing, but economists expect any stimulative effect to be modest. Ongoing weather disruptions and structural imbalances, including the property downturn, continue to weigh on momentum, even as high-tech sectors show pockets of strength.