China's Manufacturing Sector Faces Ongoing Challenges Amid Global Tensions

China's manufacturing sector contracted for the third consecutive month in June, though the pace of decline slowed, indicating that recent policy measures are beginning to take hold. An increase in new orders and improved supplier delivery times were promising signs, yet business sentiment remains subdued.

The National Bureau of Statistics reported a slight rise in the purchasing managers' index to 49.7 in June from 49.5 in May. Despite this increase, the index remains below the 50-point threshold distinguishing growth from contraction. Economists like Xu Tianchen highlight the impact of U.S. tariffs on the sector, emphasizing the need for ongoing policy support.

While domestic demand showed signs of recovery, export challenges and employment issues persist. Analysts suggest further stimulus is required to drive growth, especially as manufacturers await a stable trade agreement between Beijing and Washington. The government remains committed to transitioning to a consumer-driven economy, a shift that will require careful management to ensure stability.

(With inputs from agencies.)