S&P Survey Suggests China Factory Activity Highest in 5 Years
By Reuters | 03 Mar, 2026

The RatingDog China PMI directly contradicts China's official survey which shows factory activity declined in February for the 2nd straight month.

China's manufacturing activity revealed mixed performances on Wednesday, with an official survey highlighting ongoing struggles for factory orders, while a private poll pointed to the sector's best business conditions in more than five years.

The official purchasing managers' index (PMI) fell to 49.0 in February from 49.3 in January, a 4-month low, the National Bureau of Statistics' survey showed. It remained below the 50-mark separating growth from contraction, and missed a median forecast of 49.1 in a Reuters poll.

In contrast, the RatingDog China General Manufacturing Purchasing Managers' Index, compiled by S&P Global, rose to 52.1 in February from 50.3 a month prior. That topped analysts' forecasts of 50.2, with new order volume rising for the ninth successive month and at the quickest rate since December 2020. 

The two surveys draw on different samples. The NBS focuses more on state-owned and large and medium-sized, domestic-facing enterprises, while the RatingDog poll profiles producers around Shanghai and in China's southwestern provinces, according to Xu Tianchen, senior economist at the Economist Intelligence Unit.

The RatingDog PMI is more sensitive to external demand, Xu said.

The official PMI sub-index for new export orders fell to 45.0 in February from 47.8 a month earlier, a 10-month low, while the RatingDog poll showed new export orders rising at their fastest pace since September 2020.

"If economic activity slows further in the coming months, I expect the government to boost investment moderately to mitigate pressure on the economy," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

"The messages from the National People's Congress will shed light on the policy outlook," he said. 

Policymakers held off on fresh stimulus in the final quarter of 2025, confident the world's second-largest economy would meet its official growth target of around 5% off the back of record exports and a drive to diversify away from the United States, in response to President Donald Trump's tariffs.

But economists expect growth to stay weak in the first quarter of 2026 without further policy support.

Steps such as targeted interest-rate cuts and further cuts in banks' reserve requirements are unlikely to help boost growth, they said, after similar easing measures delivered only limited gains since the end of the COVID-19 pandemic.

Economists said the weak official PMI should not simply be attributed to the Lunar New Year as the data is seasonally adjusted to reflect factories shutting down for the holidays - which ran a record nine days from February 15 to February 23 this year. However, they said the model is imperfect, and widespread closures likely still distorted the results. 

FRESH CONSUMPTION DRIVE 

The official non-manufacturing PMI, which includes services and construction, picked up to 49.5 from 49.4 in January, while the RatingDog poll showed services activity rising at its fastest pace in 33 months.

The positive momentum in the services sector should give policymakers some encouragement ahead of the annual legislative session starting on Thursday. Last year, Chinese leaders prioritised boosting domestic consumption to counter the economic impact of U.S. tariff shocks.

Premier Li Qiang is expected to make fresh pledges to boost domestic demand and curb overcapacity when he delivers the government's work report and next five-year plan during Thursday's opening of parliament.

Li is also expected to announce the official economic growth target for 2026.

Economists polled by Reuters in January forecast growth slowing to 4.5% this year and keeping that pace in 2027. 

(Reporting by Joe Cash; Editing by Jacqueline Wong)