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China's PMI steadies above 50 as exports push growth

What's happened

China's official PMI has held at the expansion threshold near 50, with new orders and production softening slightly. Analysts cite robust energy security and ongoing export strength, though domestic demand remains sluggish amid a housing slump. Exports to Europe and Southeast Asia help offset U.S. demand weakness. Morgan Stanley sees 2026 growth near the 4.5–5% target.

What's behind the headline?

Key takeaways

  • The PMI has stayed above 50, signaling ongoing expansion, though the index has cooled since April.
  • New orders have slipped to 49.9, suggesting domestic demand is not yet fully rebounding.
  • Export-oriented sectors, especially autos, technology, and AI-related goods, are contributing to growth, while raw-material stockpiles have weakened, hinting at inventory adjustments.
  • Analysts credit China’s energy security and diversified sources as reducing exposure to global oil-price shocks, helping sustain production and exports.
  • The government maintains a 2026 growth target of 4.5%–5%, with policy levers likely to focus on high-end manufacturing and external demand to meet the goal.

Forecast: If oil prices stabilise and supply chains normalise, exports may remain a key growth driver into Q3 and Q4, supporting a modest expansion trajectory.

How we got here

The National Bureau of Statistics has released the May PMI data, showing a moderation from April’s 50.3 to 50.0. The release highlights a split between external demand, supported by Europe and Southeast Asia, and domestic demand, which has lagged due to a long property downturn. The report notes energy security as a mitigating factor for China amid global oil-market volatility, with leaders targeting 4.5%–5% growth for 2026.

Our analysis

The Independent reports the official PMI moderation and notes energy considerations shaping export resilience, with Morgan Stanley analysts highlighting a 4.5%–5% target for 2026. AP News mirrors the same PMI data and underscores the shift in export composition and domestic demand weakness. Both outlets emphasize energy security and external demand as central to the outlook.

Go deeper

  • Will China’s export mix continue to offset domestic weakness?
  • How might oil-price volatility affect manufacturing plans in the coming quarter?
  • What sectors are most at risk if energy dynamics shift?

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