China’s factory activity unexpectedly fell in July as the official manufacturing PMI dropped to 49.2 (below the 50 growth threshold), the first contraction in five months. The non-manufacturing PMI (services + construction) slipped to 49 — its weakest since Dec 2022 — while the construction PMI plunged to 47. Causes cited include summer heat waves, flooding, a high base last year and seasonal weakness. Markets reacted mildly (government bonds largely flat; offshore yuan little changed). Q2 GDP slowed to 4.3% year-on-year, though Jan–Jun growth was 4.7% (within the 2026 target). Officials pledged timely, pragmatic policy support and faster public spending, leaving investors watchful for possible stimulus after recent infrastructure spending cuts.
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