China’s manufacturing activity contracts for fourth month as economic recovery lags

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China’s manufacturing activity contracted in January for the fourth month in a row, reflecting sluggish momentum in the world’s second-largest economy at the start of the year despite policymakers’ efforts to boost confidence in the recovery.

The country’s official manufacturing purchasing managers’ index released on Wednesday was 49.2 for the month, in line with a median forecast of analysts polled by Reuters and edging up from a reading of 49 in December. A reading below 50 marks a contraction from the previous month.

The non-manufacturing index, which covers services and construction, rose 0.3 points from the previous month to 50.7 — the highest level since September and indicative of “steady expansion”, the National Bureau of Statistics said.

However, analysts said the figures showed that a long-running property downturn, weak export demand and low investor and consumer confidence continued to weigh on the Chinese economy.

“Economic momentum remained muted as the deflationary pressure persists,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.

China has announced a series of measures to support the economy, in particular strengthening credit to stimulate the property sector, infrastructure building and other strategic sectors.

While gross domestic product grew 5.2 per cent last year, exceeding the official target of 5 per cent, that figure was flattered by a low-base effect from the previous year, when coronavirus pandemic lockdowns gripped the country.

The IMF has said China’s stimulus efforts, which include fiscal investment in disaster relief, will improve its outlook this year, and on Tuesday the multilateral lender raised its projection for 2024 growth to 4.6 per cent, up from 4.2 per cent in October.

“The upgrade reflects carry-over from stronger-than-expected growth in 2023 and increased…