Star Metro - China factory activity loses steam in January

A key measure of industrial health, the manufacturing purchasing managers' index slipped to 49.3 this month, the National Bureau of Statistics (NBS) said.

The reading fell below the 50-point mark that divides expansions and contractions, also significantly behind the 50.1 forecast by a Bloomberg survey of economists.

NBS statistician Huo Lihui said in a statement that the data reflected "insufficient effective market demand", as well as a "traditional off-season" for certain manufacturing sectors.

December's slight uptick at 50.1 had snapped an extended negative streak that began in April.

The world's second-largest economy is facing a persistent domestic consumer slump, weighing on activity even as exports remain robust.

The decline in factory activity shown Saturday was the result of "weak domestic demand", Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note.

"Economic activity may soften in (the first quarter)," Zhang said.

Last year, exports represented the "pillar of growth", he said, adding that the sector's "sustainability is very important for the growth outlook".

China achieved a historic trade surplus of $1.2 trillion last year -- a key strong spot as consumer sentiment at home remained subdued.

Beijing has pledged "forceful" measures to boost demand in coming years, with some key policies expected to be announced in March with the release of the government's newest "five-year plan".

A protracted debt crisis in China's vast real-estate sector has discouraged would-be homebuyers from investing in property -- long a key store of wealth.

Complicating the challenges are demographic trends, with a shrinking and ageing population weakening the outlook for a future spending boom.

The country's economy grew five percent in 2025, official data showed this month, among its slowest rates of growth in decades.

Leaders are expected to announce a similar growth target for this year at a key annual political gathering in March.

Y.X. Gagnon--SMC