China's factory activity expanded for a second consecutive month in April, according to an official survey released on Thursday, demonstrating the resilience of the world's second-largest economy despite rising energy costs stemming from the conflict in Iran.
Official PMI Data
The official manufacturing Purchasing Managers' Index (PMI) edged down to 50.3 in April from 50.4 in March, as reported by the National Bureau of Statistics. This figure surpassed economists' expectations. The PMI is measured on a scale from 0 to 100, with readings above 50 indicating expansion.
The sub-index for new orders eased to 50.6 from 51.6 in March, while the production sub-index saw a slight uptick to 51.5.
Impact of Oil Prices and Export Demand
According to Leah Fahy, senior China economist at Capital Economics, higher oil prices have not yet dampened industrial activity in China. She noted in a research note this week that the recent acceleration in industrial activity appears to be driven by strong export demand. Additionally, surging oil prices are boosting global demand for green technology, benefiting Chinese companies that dominate the manufacturing of clean energy equipment.
Private Sector Survey Shows Stronger Growth
A private sector PMI survey conducted by S&P Global and RatingDog, a Chinese credit research and analysis firm, painted a more optimistic picture. It indicated that China's factory activity rose to 52.2 in April, up from 50.8 in March. This survey places greater emphasis on smaller and export-oriented private companies.
Trade and Economic Outlook
U.S. tariffs on China have been reduced following a Supreme Court ruling earlier this year that struck down sweeping tariffs imposed by U.S. President Donald Trump. Fahy suggested that China's exports to the United States could pick up in the coming months as a result. A long-anticipated visit by Trump to Beijing next month to meet with Chinese leader Xi Jinping may help extend a year-long trade truce reached between the two leaders late last year.
China's economy expanded at an annual rate of 5% in the first quarter of 2026, accelerating from the previous quarter and beating economists' forecasts. Chinese leaders have set an economic growth target of 4.5% to 5% for 2026, the lowest since 1991. A prolonged slump in the property sector has weighed on domestic investment and consumption, though exports remain robust. China recorded an all-time high trade surplus of $1.2 trillion last year.
