China Factory Activity Contracts as Export Orders Decline

China's manufacturing sector returned to contraction in October as weaker export demand and declining production weighed on factory activity, according to data released Saturday by the National Bureau of Statistics. The world's second-largest economy recorded a manufacturing Purchasing Managers' Index (PMI) of 49.3, reversing September's recovery amid mounting international trade pressures.

The October reading fell from 50.1 in September, following 49.8 in August. The PMI measures business activity through monthly company surveys on a scale from 0 to 100, with readings below 50 indicating contraction and figures above 50 signaling expansion.

Several major manufacturing indicators also weakened during October. The new export orders index dropped to 48.7 from 50.0 in September, while the production index declined to 49.8 from 51.7, according to the National Bureau of Statistics.

The manufacturing slowdown comes as China's trading partners increasingly criticize its growing trade surpluses. Several governments argue that the influx of lower-priced Chinese products is undermining the competitiveness of their domestic industries.

The European Union, which comprises 27 member countries, has raised concerns about its trade imbalance with China. The bloc said its trade deficit reached $1.1 billion per day in 2025 and has introduced measures to address the imbalance, including an agreement with Beijing to cap imports of Chinese hybrid vehicles.

China has expanded exports to Europe, Southeast Asia and Latin America since the United States imposed higher tariffs last year. The shift has intensified international discussions about trade imbalances and market access.

German President Frank-Walter Steinmeier addressed the issue during a speech at Beijing University on Thursday, October 29. He acknowledged China's concerns about external economic pressures while warning against increasing other countries' dependence on its economy.

"It's understandable that China wants to protect its economy against external shocks and negative influences," said German President Frank-Walter Steinmeier.

Steinmeier also argued that protecting China's economy should not result in greater economic dependence among its trading partners. During his visit, he met Chinese President Xi Jinping and Premier Li Qiang on Friday, October 30.

Premier Li Qiang told Steinmeier that China was willing to import more high-quality products from Germany, according to the report. The discussion came amid European concerns about the imbalance in bilateral trade.

Meanwhile, some economists expect China's exports to remain strong through the end of 2026. They have also forecast that the country's overall trade surplus could exceed the record $1.2 trillion recorded last year.

Trade relations are also expected to feature in discussions between U.S. President Donald Trump and Chinese President Xi Jinping. The two leaders are expected to meet in mid-November on the sidelines of the Asia-Pacific Economic Cooperation summit in Shenzhen, China.