SHENZHEN, CHINA – AUGUST 30: A man stands on the waterfront overlooking MSC and Ocean Network Express (ONE) container ships berthed beneath gantry cranes at Yantian Port on August 30, 2026, in Shenzhen, Guangdong Province, China.
Cheng Xin | Getty Images News | Getty Images
China’s factory activity returned to growth in September as a deepening economic malaise prompts policymakers to ramp up stimulus steps and bolster growth.
The official manufacturing purchasing managers’ index rose to 50.1 from 49.8 in August, National Bureau of Statistics data showed Wednesday, in line with analysts’ forecast in a Reuters poll.
The modest expansion was driven by accelerated activity in equipment and high-tech-related manufacturing, as well as consumer industries, according to NBS chief statistician Huo Lihui.
The non-manufacturing PMI also returned to expansionary territory, climbing to 50.2, as business activity picked up in the services sector, and reached its highest level this year in the construction sector.
Manufacturers in the country have benefited from the AI hardware boom, while weak consumer demand at home has been a major worry, with higher energy costs owed to the Middle East war weighing on margins.
‘Mini stimulus’
China’s top economic and financial policymakers on Tuesday unveiled targeted fiscal and monetary measures to lower financing costs and boost central bank lending, as Beijing calls for stronger counter-cyclical support to keep the economy on track to meet its full-year growth target.
Among the steps announced Tuesday, the finance ministry pledged mortgage subsidies for qualified home buyers, and the People’s Bank of China expanded the quota for a lending support program for banks to finance infrastructure projects and offer loans to targeted sectors including technology and small firms. The central bank also reduced the interest rate on that program to make housing more affordable.
“The new round of supportive measures is not sufficient to bolster growth,” a team of economists at Nomura wrote in a note, adding that the steps were too small to address the real barriers to growth.
The moves come as economic indicators showed months of deterioration, following a disappointing second quarter.
The policy announcements are a “mini stimulus” that would do “just enough” to achieve this year’s growth target of 4.5%-5%, said Larry Hu, China economist at Macquarie. Hu anticipated Beijing to act with less urgency to boost demand as long as exports remain strong.
Exports have been one of the few drivers of China’s economy this year, but that engine is showing signs of strain as trading partners voice growing concerns over the country’s excess manufacturing capacity and heavy reliance on foreign demand, while domestic consumption lags.
Hu projects China’s real GDP growth to pick up to 4.4% and 4.7% in the final two quarters of this year, respectively, from a three-year low of 4.3% in the second quarter.
Modest housing boost
Goldman Sachs views the Tuesday measures “more significant as a policy signal than as a near-term growth impulse.” Targeted credit easing mainly supports the supply side, and whether it translates into investment and broader growth will depend on how the policies are implemented, the bank said.
The mortgage subsidy, which runs for one year, could offer some direct support for housing demand and lift home sales in the short term, by pulling forward some first-home purchases, Goldman Sachs analysts said.
But the bank expects only a modest boost to overall growth, given the tight eligibility requirements: the subsidy is limited to first-time buyers of homes priced at 1.5 million yuan ($224,000) or less and no larger than 120 square meters.
— CNBC’s Evelyn Cheng contributed to this report.
