China’s April factory activity expands despite Middle East war

“China’s factory activity grew for a second straight month in April, official data showed Thursday, showing resilience despite surging energy prices and shipping disruption caused by the war in the Middle East. This picture shows cars made by MG on a dock before being loaded onto a ship for export at the port in Lianyungang, in China’s eastern Jiangsu province on April 29, 2026. Photo: CN-STR/AFP/China OUT. The manufacturing purchasing manager’s index –- a key measure of industrial activity — was 50.3 in April, according to the National Bureau of Statistics (NBS), above the 50-point mark that divides expansion and contraction. That figure fell from 50.4 in March, but was ahead of a forecast of 50.1 in a Bloomberg survey of economists. The world’s second-largest economy has been struggling with a slowdown in domestic demand and investment in recent years that has weighed on its vast manufacturing sector. March’s figure was the highest in a year, with manufacturing activity contracting in 10 out of 11 months before that. April’s statistics showed economic output had “maintained expansion” while manufacturing “continued to show a positive trend”, according to NBS statistician Huo Lihui. There was strong demand for electrical and IT equipment, but weaker market activity for petroleum and coal processing, Huo said in a statement. But manufacturers faced higher costs as the prices of raw materials rose significantly, particularly in the energy and chemical sectors, Huo said. Beijing’s central business district with the Forbidden City in the foreground. File photo: Wikicommons. The data suggests Chinese producers remain resilient despite global economic disruption caused by the US-Israeli war with Iran that has seen energy prices surge and Tehran restrict access to the vital Strait of Hormuz. “The PMI index shows the manufacturing sector has not been adversely affected by the conflict in the Middle East,” according to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. “The monetary policy stance seems to have a marginally loosening bias, which helps to mitigate the higher energy prices,” he said in a note. Julian Evans-Pritchard at Capital Economics added that exports and strong external demand were the main drivers. “Soaring demand for memory chips and green tech products likely played a key role,” he said. Despite the positive factory data, China’s non-manufacturing PMI — a gauge of activity across services and construction — slumped to 49.4 in April, down from 50.1 in March. Business activity in the wholesale and retail sectors contracted, suggesting consumer demand remains weak.

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