China's factory activity expanded for a second consecutive month in April, official data showed on Thursday, as the economy demonstrated resilience despite higher energy prices linked to the Iran war. The official manufacturing purchasing managers' index (PMI) edged down to 50.3 from 50.4 in March, beating economists' expectations. A reading above 50 indicates expansion.
The new orders sub-index slowed to 50.6 from 51.6 in March, while the production sub-index rose slightly to 51.5, according to the National Bureau of Statistics. Higher oil prices have not yet weighed on industrial activity, according to Leah Fahy, senior China economist at Capital Economics, who noted that the recent acceleration appears driven by strong export demand.
Surging oil prices are also boosting global demand for green technology, benefiting Chinese companies that dominate clean energy equipment manufacturing, Fahy added. A separate private sector PMI from S&P Global and RatingDog showed factory activity rose to 52.2 in April from 50.8 in March, focusing on smaller and export-focused private firms.
US tariffs on China have been lowered following a Supreme Court ruling against President Donald Trump's sweeping tariffs, which could boost Chinese exports to the US in coming months, Fahy said. A planned visit by Trump to Beijing next month to meet President Xi Jinping may help extend a year-long trade truce.
China's economy grew at a 5% annual pace in the first quarter, accelerating from the previous quarter and beating estimates. The government has set a 4.5% to 5% growth target for 2026, the lowest since 1991. A prolonged property slump has weighed on domestic investment and consumption, but exports remain robust, with China recording a record $1.2 trillion trade surplus last year.
