Hong Kong, Mar 4 (AP) China's factory activity shrank for a second month in February, though lower US tariffs could bring about a small boost in the coming weeks.

The official manufacturing purchasing managers index, or PMI, slipped to 49 from 49.3 in January, a four-month low, the National Bureau of Statistics reported Wednesday. The figure from its monthly survey of factory managers is measured on a scale of 0 to 100 and indicates contraction when it is below 50.

December's manufacturing PMI reading of 50.1 broke China's eight consecutive months of contraction, but its recent return to negative territory signals more weakness in manufacturing especially under sluggish domestic consumption and demand.

Huo Lihui, a National Bureau of Statistics chief statistician, attributed the weaker data in a statement to seasonal factors including the Lunar New Year holiday, which lasted for nine days in mid-February this year.

A separate private sector PMI survey by Chinese credit research and analysis company RatingDog also released Wednesday appeared more upbeat, with a February PMI reading of 52.1, up from 50.3 in January, remaining in the expansion territory and the sharpest expansion since December 2020.

The private survey typically better reflect trends among smaller and more export-focused private companies.

Overseas demand has rebounded in February and was strong, said Yao Yu, founder of RatingDog, in a note, and new export orders have grown notably.

“The mixed bag of manufacturing PMI data suggests a similar trajectory to what we observed in 2025,” said Lynn Song, chief economist for Greater China at ING Bank, in a research note. “Resilient external demand (is) continuing to drive growth, while domestic demand has been disappointingly soft.” The Supreme Court ruling last month against Trump's reciprocal tariffs, which resulted in the reduction in US tariffs globally including for China, is also likely to provide a “small boost” to exports and manufacturing activity over the coming months, said Zichun Huang, a China economist at Capital Economics, in a recent note.

US President Donald Trump's planned meeting with Chinese leader Xi Jinping in April, which could bring about an extended trade truce between the two countries, could also be positive news for Chinese manufacturers.

China's domestic demand weakness, however, is likely expected to continue to be a problem, analysts said, as a prolonged real estate sector downturn dragged on consumption and investment.

This week, China is set to unveil its economic growth target at its annual national congress that begins Thursday, with economists expecting a growth target of 4.5 per cent or above.

The congress, which lasts for around a week, will also approve Beijing's five-year policy blueprint for 2026-2030, with an expected focus on areas such as boosting technological advancements and self-reliance. (AP) NPK NPK

Tariff reduction boosts export prospects while domestic demand weakness keeps manufacturing contraction risk elevated in coming months. China's official manufacturing PMI returned to contraction, driven by weak domestic consumption and real estate weakness, while private-sector PMI showed export-led expansion. A judicial reduction of reciprocal tariffs has lowered US tariff levels globally and is expected to provide a modest boost to exports. Upcoming high-level bilateral talks and China's national congress, which will set a growth target and approve a five-year plan focused on technology and self-reliance, are poised to influence near-term manufacturing prospects.