China’s post-pandemic economic trajectory continues to show signs of internal friction as newly released data for April reveals a divergent recovery. While the manufacturing sector managed to stay in expansionary territory for a second consecutive month, the broader economic picture is clouded by a sudden downturn in the non-manufacturing sector, particularly in services and construction. This mixed performance underscores the challenges Beijing faces in balancing its industrial ambitions with a sluggish domestic consumer base.
The official manufacturing Purchasing Managers’ Index (PMI) came in at 50.3% for April, a marginal 0.1 percentage point dip from March but critically staying above the 50-point threshold that separates growth from contraction. High-tech manufacturing and equipment manufacturing remained the primary engines of this stability, posting readings of 52.2% and 51.8%, respectively. These figures suggest that the government’s strategic push toward 'new productive forces'—advanced industrial sectors like EVs and aerospace—is successfully sustaining factory output.
However, the non-manufacturing sector presented a more sobering narrative, falling to 49.4% and sliding into contraction. The construction sector, a traditional pillar of Chinese growth, dropped to 48.0%, indicating that the long-standing real estate crisis continues to stifle physical investment. Similarly, market activity in wholesale, retail, and household services remained weak, reflecting a Chinese consumer who remains cautious despite various government efforts to stimulate domestic spending.
Adding a layer of complexity to this landscape is the sharp rise in price indices. The main raw materials purchase price index reached a multi-year high of 63.7%, signaling significant inflationary pressure on the input side that could eventually squeeze corporate profit margins if not passed on to consumers. Despite these headwinds, the business activity expectation index for manufacturing rose to 54.5%, suggesting that enterprise confidence in a mid-term turnaround remains resilient even as current demand fluctuates.