SHENZHEN, CHINA – AUGUST 30: A man stands on the waterfront overlooking MSC and Ocean Network Express (ONE) container ships docked under gantry cranes at Yantian Port on August 30, 2026, in Shenzhen, Guangdong province, China.
Cheng Xin | Getty Images News | Getty Images
China’s industrial activity returned to growth in September as growing economic malaise prompts policymakers to step up stimulus measures and support growth.
The official manufacturing purchasing managers’ index rose to 50.1 from 49.8 in August, data from the National Bureau of Statistics showed on Wednesday, in line with forecasts by analysts polled by Reuters.
The modest expansion was driven by accelerating activity in equipment manufacturing and high-tech sectors, as well as consumer industries, according to Huo Lihui, chief statistician of the NBS.
The non-manufacturing PMI also returned to expansionary territory, climbing to 50.2, thanks to the resumption of business activity in the services sector, and reached its highest level this year in the construction sector.
The country’s manufacturers have benefited from the boom in AI hardware, while weak domestic consumer demand is a major concern, with rising energy costs due to war in the Middle East weighing on margins.
“Mini-stimulus”
China’s top economic and financial policymakers on Tuesday unveiled targeted fiscal and monetary measures aimed at lowering financing costs and increasing central bank lending, as Beijing calls for stronger countercyclical support to keep the economy on track to meet its full-year growth target.
Among the measures announced Tuesday, the Finance Ministry promised mortgage subsidies for qualified home buyers, and the People’s Bank of China increased the quota of a loan support program for banks to finance infrastructure projects and offer loans to targeted sectors, including technology and small businesses. The central bank also reduced the interest rate of this program to make housing more affordable.
“The new round of support measures is not enough to support growth,” a team of Nomura economists wrote in a note, adding that the measures were too modest to tackle the real obstacles to growth.
These measures come as economic indicators have shown months of deterioration, after a disappointing second quarter.
The policy announcements constitute a “mini stimulus package” that would do “just enough” to hit this year’s 4.5 percent to 5 percent growth target, said Larry Hu, China economist at Macquarie. Hu expects 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 express growing concerns about the country’s excess manufacturing capacity and heavy reliance on foreign demand, while domestic consumption lags.
Hu expects China’s real GDP growth to rise to 4.4% and 4.7% respectively in the last two quarters of this year, following a three-year low of 4.3% in the second quarter.
A modest increase in housing
Goldman Sachs considers Tuesday’s measures “more significant as a political signal than as a short-term growth boost.” Targeted credit easing mainly supports the supply side, and its translation into investment and broader growth will depend on how policies are implemented, the bank said.
The mortgage subsidy, which extends over a year, could offer some direct support to housing demand and boost home sales in the short term, bringing forward some first-time home purchases, Goldman Sachs analysts said.
But the bank expects only a modest boost to overall growth, given the strict eligibility requirements: The subsidy is limited to first-time buyers of homes priced at 1.5 million yuan ($224,000) or less and not exceeding 120 square meters.
— CNBC’s Evelyn Cheng contributed to this report.
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