Manufacturers report uptick in orders in February

China's factory activity expanded in February, marking its fastest pace in three months, a private survey showed on Monday, signaling stabilizing growth in the first quarter and a strong start for the world's second-largest economy in 2025.

The Caixin China General Manufacturing Purchasing Managers' Index, an indicator of the operating conditions of the country's manufacturing sector, rose to 50.8 in February from 50.1 in January, remaining above the 50 mark that separates expansion from contraction for a fifth consecutive month, media group Caixin said in a report on Monday.

Economists said they expect that the Chinese economy will get off to a pretty good start in the first quarter with around 5 percent year-on-year growth, supported by the continuing recovery trend that began in late 2024, the expansion of the consumer trade-in program for 2025 and fresh stimulus measures set to be unveiled during the two sessions, the annual meetings of China's top legislative and political advisory bodies.

They said that Chinese policymakers will likely prioritize stabilizing growth and expanding domestic demand as this year's key economic tasks, anticipating that the authorities will soon introduce new incremental policies to spur consumption, foster the development of new quality productive forces and bolster the private economy.

Manufacturers surveyed for the Caixin report said that a general improvement in economic conditions and the introduction of new products underpinned the latest rise in new orders, with new export business rising modestly for the first time since November due to stronger demand from foreign clients.

Monday's data was in line with the official PMI figure released on Saturday. The official PMI for the manufacturing sector rose from 49.1 in January to 50.2 in February, as enterprises gradually resumed work and production after the Spring Festival holiday, said the National Bureau of Statistics.

"The holiday period saw robust consumption momentum, and technological innovations in certain industries added to the positive sentiment, helping to sustain the manufacturing market recovery," said Wang Zhe, a senior economist at Caixin Insight Group.

Meanwhile, Wang highlighted that the broader economy still faces challenges, saying that this month represents a critical policy window.

"Supportive measures should address market expectations and societal concerns, focusing on key economic bottlenecks. Meanwhile, policies should prioritize demand-side measures, strengthen countercyclical adjustments, and promote higher household income and consumer confidence," he said.

Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said that despite headwinds and the challenges ahead, he expects that China's manufacturing PMI will remain in expansion territory in March, given the seasonal recovery and pro-growth policies in the pipeline.

"During the two sessions, policymakers will likely announce a higher fiscal deficit ratio, as well as greater issuance of ultra-long-term special treasury bonds and local government special bonds, while following a moderately accommodative monetary policy.

"Stronger support will be provided for the replacement of old growth drivers with new ones, alongside measures to stabilize the real estate market," he said. "That will help boost market confidence."

Lu Ting, chief China economist at Nomura, said: "China's economy appears to be having a relatively good start to the year. Investment and consumption might have been supported by the tech-led stock market rally. The expansion of the trade-in program is stimulating sales of digital goods."

As of Feb 19, more than 3.97 million consumers bought over 4.87 million units of home appliances through trade-in deals this year.

Over 26.71 million consumers have applied for subsidies to buy new digital products, including smartphones, tablets, smartwatches and wristbands. In addition, some 647,000 electric bikes have been exchanged for new ones, according to the Ministry of Commerce.

"On the domestic demand front, China has made remarkable achievements in boosting the trade-in program for consumer goods," said Li Chao, chief economist at Zheshang Securities. "We anticipate a strong start to the economy in the first quarter. First-quarter GDP growth could reach 5.1 percent, with the full-year trajectory expected to follow a U-shaped pattern."

Citing recent policy signals, Xiong Yuan, chief economist at Guosheng Securities, said that a greater emphasis will be placed on stabilizing the private sector, boosting consumption and strengthening technological innovation.

"This could be reflected in new policy statements and new incremental measures to provide stronger support," Xiong said.

ouyangshijia@chinadaily.com.cn