China manufacturing shrinks in August despite new US trade truce

China's President Xi Jinping during a bilateral meeting with Armenia's Prime Minister Nikol Pashinyan ahead of the Shanghai Cooperation Organization (SCO) Summit in Tianjin, on August 31, 2025. [AFP]

China's factory output ticked up in August but still recorded a fifth straight month of contraction, official data showed Sunday, as Beijing and Washington press on with trade talks.

The Purchasing Managers' Index -- a key measure of industrial output -- was 49.4, the National Bureau of Statistics (NBS) said, up slightly from 49.3 in July.

A Bloomberg analysts' poll had forecasted the index would be 49.5.

The last time China recorded a figure above 50 -- indicating growth -- was in March.

NBS statistician Zhao Qinghe hailed the improvement from a month earlier as evidence that "overall economic prosperity continues to expand".

"The business climate has improved," he said.

In July, the NBS attributed manufacturing struggles to severe weather, including floods and high temperatures.

China has struggled to maintain a strong economic recovery since the pandemic, as it fights a debt crisis in the crucial property sector, chronically low consumption and elevated youth unemployment.

"Economic momentum slowed in (the third quarter) as domestic demand remains weak," Zhiwei Zhang, chief economist at Pinpoint Asset Management, said Sunday.

"The macro outlook in the rest of the year largely depends on how long exports can stay strong and whether fiscal policy will become more supportive."

China's bruising trade war with the United States -- now on hold pending a deal -- threatens the export-dependent economy.

Beijing and Washington have extended a truce on most reciprocal duties to November 10 as they continue talks.

Senior Chinese trade negotiator Li Chenggang urged "equal dialogue and consultation" between the two nations when he concluded a three-day visit to the United States on Friday, according to a statement from China's commerce ministry.