China’s factory activity unexpectedly contracted in November, according to a private survey by RatingDog and S&P Global, as soft domestic demand weighed on the world’s second-largest economy.

• RatingDog China General Manufacturing PMI dropped to 49.9, below the 50 benchmark that separates expansion from contraction, missing expectations of 50.5.
• The official manufacturing PMI also showed contraction at 49.2, marking the eighth consecutive month of decline.

Key Insights

• New orders nearly stalled, prompting manufacturers to cut workforce and purchasing, while adopting cautious inventory management.
• New export orders, however, grew at the fastest pace in eight months, providing some relief.
• The official non-manufacturing PMI, covering services and construction, fell to 49.5, its first contraction since December 2022, dragged down by weakness in real estate and residential services.

Broader Economic Signals

• Fixed-asset investment fell 1.7% in the first ten months of 2025, the weakest since 2020.
• Industrial output rose 4.9% in October, while retail sales growth slowed to 2.9%, both at multi-month lows.
• Exports in October contracted 1.1% YoY for the first time in nearly two years.
• Economists forecast China’s Q4 GDP growth may slow below 4.5%, down from 4.8% in Q3 2025.

Policy Context

• Upcoming Politburo and Central Economic Work Conference meetings may set next year’s economic priorities.
• Tensions with the U.S. have eased after a temporary trade truce, including tariff rollbacks and suspension of port fees for Chinese vessels.

Outlook: While exports show some recovery, domestic demand weakness and slowing investment suggest China’s economy may face a soft patch at the end of 2025, prompting cautious policymaking.