China's factory activity saw a marginal improvement in August, buoyed by robust export demand, according to an official survey. The manufacturing purchasing managers' index (PMI) rose to 49.8 from 49.2 in July, a figure that exceeded economists' expectations. Despite this recovery, the index remains below the 50-point threshold, indicating that overall manufacturing activity is still in a contraction.
The PMI, which is based on monthly surveys and ranges from 0 to 100, saw several sub-indexes return to expansionary territory. The production sub-index increased to 50.4 from 49.9, and the new orders sub-index recovered to 50.6 from 48.5. The new export orders sub-index also improved, reaching 50.1 from 49.6.
Officials from China's National Bureau of Statistics stated that the August data reflects an improvement in the country's overall economy. This uptick in exports is supported by strong global demand for high-tech goods, including semiconductors, driven partly by the artificial intelligence boom. Additionally, robust demand for electric vehicles, influenced by factors such as energy costs, has contributed to export growth.
Chinese exports saw a significant jump of nearly 24% in July compared to the previous year and an increase of over 18% in the first seven months of the year. The country is also increasingly exporting to regions like Europe and Southeast Asia, a trend analysts suggest is partly due to U.S. tariffs impacting trade between the two nations. Demand for green technologies has also accelerated, providing an additional boost to Chinese exports.
However, sluggish domestic demand, exacerbated by a prolonged slump in the property sector, continues to weigh on the Chinese economy. The nation's economic growth was 4.3% annually in the April-June quarter, its slowest pace in over three years.
Trade issues are expected to be a topic of discussion during an anticipated meeting between U.S. President Donald Trump and Chinese leader Xi Jinping, scheduled for late September.