HANGZHOU, CHINA – JUNE 30, 2025 – In a surprising turn of events, China’s factory activity showed signs of recovery among export-oriented manufacturers in June, as revealed by a private survey released on Tuesday. The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) climbed to 50.4, surpassing Reuters’ median estimate of 49.0. This marks a notable rebound from May’s 48.3, which represented the steepest contraction since September 2022.
This private survey contrasts sharply with the official PMI report published on Monday, which indicated that manufacturing activity declined for the third consecutive month in June. The official figures, which are based on a broader sample of over 3,000 companies, align more closely with industrial output, while the Caixin survey taps into a smaller pool of around 500 primarily export-focused firms. The methodologies differ, with the official survey conducted at month’s end and the Caixin survey compiled in mid-month.
Both supply and demand for manufacturing experienced growth in June, according to the Caixin report, with production expanding at its fastest rate since November. However, the increase in new total exports was described as marginal. Tianchen Xu, a senior economist at Economist Intelligence Unit, highlighted that the rebound in the Caixin PMI was largely driven by exports, as “businesses received more export orders after the tariff truce, which pushed up their production.” Xu noted that both surveys indicate a recovery trend in the manufacturing sector.
In the first quarter, manufacturing accounted for approximately 26% of China’s GDP, as reported by Caixin, underscoring its critical role in the economy. In response to impending U.S. tariffs set to rise when a 90-day trade truce ends in mid-August, Chinese exporters have been keen to front-load shipments. It remains uncertain whether an agreement to extend this truce will be reached.
Despite efforts to pivot to alternative markets, particularly in Southeast Asia and the European Union, China’s exports to the U.S. saw a drastic plunge of 34.5% in May year-on-year, following a 21% decline in April. However, Morgan Stanley economists have noted that recent weeks have shown a softening of this export momentum as the effects of front-loading begin to wane.
Complications related to the ongoing U.S.-China trade dispute are particularly impacting smaller exporters, as highlighted by a recent Nomura report stating, “It is becoming increasingly clear that the US-China trade dispute is having a disproportionately large impact on smaller exporters.”
On a more hopeful note, there appear to be positive developments regarding the U.S.-China relations concerning the fentanyl dispute. Neo Wang, lead China economist at Evercore ISI, stated that “all we’ve seen so far pointed to further de-escalation,” as there are indications that the U.S. may drop its 20% tariff on fentanyl-related imports from China. Last month, China added two precursors for fentanyl to its list of controlled chemicals, a move following discussions between U.S. Ambassador David Perdue and China’s Minister of Public Security, Wang Xiaohong, who expressed a willingness to cooperate on drug control matters.
As the dynamics of global trade continue to evolve, China’s manufacturing future remains in a delicate balance, navigating between recovery and the complexities of international relations.
Tags: China, manufacturing, Caixin, PMI, trade relations, exports.
Original Source: https://www.cnbc.com/2025/07/01/china-caixin-pmi-factory-activity-unexpectedly-expands-in-june.html
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Publish Date: 2025-07-01 08:12:00
