BEIJING – Fresh doubts have been cast over the health of the world's second-largest economy as new data shows China's manufacturing sector unexpectedly contracted in October, sending a chill through global markets.
The official Purchasing Managers' Index (PMI), released by the National Bureau of Statistics (NBS), dropped to 49.0 in October. This reading is a significant blow, as any figure below the 50-point mark indicates a contraction in activity.
This disappointing data breaks a fragile recovery narrative and signals that the post-pandemic rebound is struggling to gain traction, putting immense pressure on Beijing to deliver more aggressive economic stimulus.
A Deeper Look at the Data
The headline number is only part of the story. The underlying data within the PMI report paints an even more concerning picture of demand, both at home and abroad.
New Orders Slump: The sub-index for new orders saw a sharp decline, falling at its fastest pace since 2023. This is a critical leading indicator, suggesting that factories will have less work in the coming months.
Weak Foreign Demand: The drop was not just domestic. The data reflects continued weakness in export orders, indicating that tepid global demand and geopolitical tensions are hitting Chinese exporters hard. This also suggests that the recent "trade truce" agreed upon at the APEC summit has not yet translated into tangible new business.
The Property Crisis Lingers
This manufacturing slowdown cannot be viewed in isolation. It is directly linked to the deep, ongoing crisis in China's property sector.
The multi-year slump in real estate—traditionally a massive driver of economic activity has shattered consumer and business confidence. With construction projects stalled and property values uncertain, demand for materials like steel and glass has plummeted. Furthermore, anxious households are saving rather than spending, further depressing domestic demand for manufactured goods.
Calls for Stimulus Grow Louder
The weak PMI data immediately intensified calls from economists for the Chinese government to "stop being so timid" with its support measures.
While the People's Bank of China (PBoC) has cut interest rates, and the government has issued some infrastructure bonds, this data suggests these efforts are not enough to counteract the powerful deflationary and confidence headwinds.
Market analysts now widely expect Beijing to be forced into action, with potential moves including:
More significant interest rate cuts.
A larger-scale government spending program.
A more forceful "bailout" or restructuring plan for the troubled property development sector.
This data sends a clear warning signal to the global economy. As the world's factory, a contraction in China has a direct ripple effect, leading to lower demand for commodities like oil and copper, and posing a significant drag on global growth prospects for 2026.