China’s manufacturing sector continued to contract for the eighth consecutive month in November 2025, according to official data released by the National Bureau of Statistics (NBS) on Sunday. The manufacturing purchasing managers’ index (PMI) edged up to 49.2 in November from 49.0 in October, but remained below the crucial 50-point threshold that separates expansion from contraction. This persistent downturn highlights the mounting challenges facing the world’s second-largest economy as it grapples with sluggish domestic demand, a global slowdown, and the lingering effects of a trade war with the United States.
The latest figures, as reported by multiple outlets including The Economic Times and the Associated Press, reflect the difficulties manufacturers have faced in sustaining a recovery following the COVID-19 pandemic. Despite a slight uptick in the PMI, output essentially stalled, with the sub-index for production coming in at a flat 50.0. Both new orders and new export orders improved slightly from October’s readings, but crucially, they remained below the 50 mark, indicating that demand—both at home and abroad—remains weak.
According to the NBS, the non-manufacturing PMI, which covers services and construction, also took a hit, falling to 49.5 in November from 50.1 in October. This marks the first time since December 2022 that the non-manufacturing PMI has slipped into contraction territory. The services component of the index fell below 50 for the first time since September 2024, dropping to its lowest level since December 2023. Analysts attributed this downturn, in part, to the fading boost from October’s national holiday, which had temporarily lifted consumer activity.
Huo Lihui, a statistician with the NBS, noted, “The business activity index for real estate and household services sectors both fell below 50, indicating subdued market activity.” However, Huo pointed out that there remains optimism among service enterprises, with the services business outlook sub-index coming in at a robust 55.9, suggesting that firms are hopeful about future market development.
For decades, China’s policymakers have relied on two main levers to stimulate growth: ramping up industrial output to boost exports when domestic spending lagged, or launching large-scale, state-funded infrastructure projects. But as Reuters and The Economic Times have reported, these traditional tools are proving less effective in today’s environment. The country is contending with a global economic slowdown, a protracted property crisis, and local governments burdened by heavy debts—factors that are making it increasingly difficult for officials to jump-start activity.
Goldman Sachs economist Yuting Yang commented in a research note, “We maintain our view that government may hold off on major policy support until the first quarter next year, since this year’s growth target appears broadly achievable.” The government has set a growth target of around 5 percent for 2025, a figure that now appears challenging in light of recent economic data.
Despite the overall contraction, there were a few bright spots. The PMI for small manufacturing firms rose by two percentage points to a six-month high of 49.1 in November, according to NBS data. Some analysts, including Tianchen Xu of the Economist Intelligence Unit (EIU), suggested that this improvement may be linked to the resilience of exports and a reduction in U.S. tariffs on Chinese goods, though the overall manufacturing picture remains subdued.
China’s economic vulnerability was underscored in the third quarter of 2025, when growth slowed to its weakest pace in a year. This slowdown has intensified the debate among policymakers over whether to double down on tough structural reforms—such as correcting longstanding supply-demand imbalances, boosting household spending, and tackling local government debt—or to roll out further stimulus measures to shore up domestic demand. The dilemma is further complicated by the political risks associated with painful reforms and the ongoing pressure from the U.S.-China trade war.
In response to these challenges, the Chinese government unveiled a new plan to boost consumption on Wednesday, November 26, 2025. The plan focuses on upgrading consumer goods in rural areas and targeting sectors like pet products, anime, and trendy toys. The move is seen as an attempt to stimulate demand in segments of the economy that have growth potential, even as broader conditions remain difficult. “If the government can earmark a third of its consumption subsidies to the services sector in 2026, that would provide a great lift to the industry and its employment,” said the EIU’s Xu, highlighting the potential benefits of targeted stimulus.
Policymakers are acutely aware of the need for reforms to address deep-seated issues. Heavy local government debt, for example, has left many provinces—some with economies rivaling those of entire countries—struggling to stand on their own. According to Reuters, officials recognize that such structural changes will be painful and carry political risks, particularly at a time when external pressures, like the U.S.-China trade war, are already weighing heavily on the economy.
Meanwhile, the trade war with the United States continues to cast a long shadow over China’s economic prospects. While there has been some easing of tensions, with U.S. President Donald Trump reducing certain tariffs, the broader relationship remains fraught. The ongoing uncertainty has made it harder for Chinese manufacturers to plan for the future, further dampening business confidence and investment.
Looking ahead, analysts polled by Reuters forecast the private-sector RatingDog PMI to come in at 50.5, down slightly from 50.6 a month earlier. This suggests that, while some private-sector firms may be faring marginally better than their state-owned counterparts, the overall economic environment remains challenging.
As 2025 draws to a close, China finds itself at a crossroads. The government’s balancing act between implementing necessary reforms and providing enough stimulus to keep the economy afloat is becoming increasingly precarious. With traditional growth engines sputtering and new sources of demand yet to fully materialize, the coming months will be critical for policymakers seeking to chart a sustainable path forward.
For now, the November data serves as a sobering reminder of the hurdles that remain. Whether China can reignite its economic engine in 2026 will depend on the effectiveness of its new consumption plan, the willingness of officials to tackle structural issues head-on, and the evolution of its complex relationship with global trading partners.
