China Faces Growth Challenges as Manufacturing PMI Signals Economic Strain Post Trade Truce
By Bob Mason
Published: November 4, 2025, 01:55 GMT+00:00
China’s economy shows new strain. Recent numbers point to a hard time even after a high-profile trade truce with the United States. In September, strong signals made many feel positive about reaching a 5% growth goal for 2025. In October, the PMI brought a pause. The measure warns that China may need more stimulus to keep up its pace.
Trade Truce Brings Temporary Relief, Long-Term Doubts Remain
A trade pause between former President Donald Trump and Chinese leader Xi Jinping eased some tension. The two sides put in place a one-year break on U.S. fees for China-linked vessels starting November 10. This step seeks to calm disputes on the seas and cut costs on shipments to the United States. In return, China stopped its retaliatory moves that had fueled more conflict. Talks continue to address U.S. worries on China’s hold over the maritime scene and to form new shipbuilding links with South Korea and Japan.
Analysts are not sure the truce will hold for a long time. Derek Scissors, Chief China Economist at China Beige Book, told CNBC that the deal left U.S. policy much like it was at the start of Trump’s term. He noted that China chose to wait on putting export controls on rare earth minerals. This choice hints that China may not yet be ready or able to enforce wide restrictions.
Manufacturing PMI Reveals Underlying Economic Pressures
September brought signs of speed in the economy, but October’s Manufacturing PMI spoke of new pressures. The index showed export orders dropping fast over the last six months. This force made makers cut export prices for the first time since May—a sign that outside demand is soft.
Makers now face thinner margins. This change might slow wage growth or even lead to cuts and blur job chances. While there was a small rise in manufacturing jobs in October, many warn this boost may not be steady. Such shifts could hurt consumer spirit and spending at home—both key for China’s growth plan.
Rising competition and weak demand add to the strain on prices. Trade numbers add another twist. Chinese exports climbed 8.3% from last year in September. Yet shipments to the United States dropped 27%. This gap has sparked ideas that more goods might be sent via third countries to dodge tariffs.
Policy and Trade Risks: Country of Origin Rules and Transshipments
Looking ahead, Chinese makers may face policy checks as the U.S. studies tougher moves to stop goods moving by indirect routes. New rules on a product’s origin might come soon. These steps could shrink the demand for Chinese goods if buyers try to avoid extra charges.
U.S. plans to cut China’s hold on global shipping and supply lines may add more trade strain. The current trade pause gives both sides about one year to adjust. Yet deep-rooted trade gaps and lower investment seem set to stay, keeping risks alive.
Market Reaction and Outlook
After news of the trade truce, mainland Chinese stocks wavered. After a pullback on October 30 from their 2025 highs, indexes like the CSI 300 and the Shanghai Composite steadied. They now trade near their best marks for the year, as investors show guarded hope.
The CSI 300 climbed 18% this year. It still stays behind Hong Kong’s Hang Seng Index, which went up 30%. Many in the market now watch upcoming economic reports. These reports will shape views on local spending, export strength, and government plans.
Conclusion
China’s goal of 5% economic growth in 2025 now faces tough tests from both home and abroad. The Trump-Xi trade pause gives a brief break and a chance for talks. But problems in the manufacturing sector, export drops, and trade policies keep the future cloudy. Beijing’s next steps—especially in support of jobs and injecting stimulus—will be key to keep the economy growing under these hard conditions.
Investors and leaders will keep a close eye on these events as China tries to balance growth hopes with new challenges in a fast-changing global trade road.
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