BEIJING (Reuters) – China’s manufacturing activity returned to expansion in February, an official factory survey showed on Saturday, indicating that Beijing’s stimulus measures are helping shore up a patchy recovery in the world’s second-largest economy.
The official purchasing managers’ index (PMI) was 50.2 inFebruary, a three-month high, compared to 49.1 in January and above the 50-mark separating growth from contraction. It beat a median forecast of 49.9 in a Reuters poll.
China’s $18 trillion economy hit the government’s growth target of “around 5%” in 2024 though in an uneven manner, with exports and industrial output far outpacing retail sales while unemployment remained stubbornly high.
Beijing is expected to maintain the same growth target this year, but analysts are uncertain over how quickly policymakers can revive sluggish demand, even as U.S. President Donald Trump’s punitive trade curbs put more pressure on Chinese exporters.
To sustain growth and counter rising external pressures, policymakers have pledged higher fiscal spending, increased debt issuance and further monetary easing.
Trump said on Thursday he would slap an extra 10% duty on Chinese goods on March 4, on top of the 10% tariff that he levied on February 4 over the fentanyl opioid crisis, to push Beijing to do more to stop the trafficking of the deadly drug.
That would result in a cumulative 20% tariff, which is still lower than the 60% he threatened on the campaign trail.
The non-manufacturing PMI, which includes services and construction, rose to 50.4 from 50.2 in January.
Investors are looking to the annual parliament meeting that will begin on March 5, when the government is expected to unveil fresh stimulus measures, alongside economic targets.
Further support for the struggling property sector and indebted local developers could also be announced, which significantly impact domestic demand and local government finances.
Getting Chinese consumers spending again would reduce producers’ exposure to Trump’s tariff threats.
Analysts polled by Reuters forecast the private sector Caixin PMI rose 50.3, from 50.1 in January. The data will be released on March 3.
(Reporting by Joe Cash; Editing by Muralikumar Anantharaman)
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