China’s Manufacturing Expands as Stimulus Boosts Growth Amid Trade Tensions

China’s manufacturing activity surged in February, marking its fastest growth in three months as new orders and increased purchasing drove production. The official Purchasing Managers’ Index (PMI) climbed to 50.2 from 49.1 in January, exceeding forecasts and signaling expansion. The non-manufacturing PMI also rose slightly to 50.4, reflecting steady growth in services and construction.

The improved figures suggest recent stimulus measures are stabilizing the world’s second-largest economy ahead of China’s annual parliamentary meeting on March 5. However, sustainability remains uncertain due to ongoing U.S.-China trade tensions. U.S. President Donald Trump announced a 10% tariff hike on Chinese goods, effective March 4, escalating pressure on Beijing to curb fentanyl trafficking. The move follows a previous 10% tariff in February, with China warning of potential retaliation.

Despite external pressures, China’s $18 trillion economy met its 2024 growth target of "around 5%." However, retail sales lagged behind exports and industrial output, while unemployment remained high. Policymakers are expected to maintain the same growth target this year, with additional fiscal spending and monetary easing to support demand.

Although new export orders and employment remained weak, job figures hit a 22-month high. Analysts note seasonal factors related to the Spring Festival may have influenced the data, and a clearer picture will emerge after trade data is released on March 7. The private Caixin PMI, expected to rise to 50.3 from 50.1, will be released on March 3.

With mounting external risks, China’s leadership has pledged to counter economic shocks. As trade tensions intensify, Beijing is seeking to resume negotiations with Washington to stabilize relations and sustain growth.