China's factory activity contracted in February 2026 due to weak demand and the Lunar New Year, but services saw slight recovery.

According to the National Bureau of Statistics, China's official manufacturing PMI fell to 49.0 in February 2026, indicating a second consecutive month of contraction due to weak domestic demand and the Lunar New Year holiday. The non-manufacturing PMI increased slightly to 49.5, indicating a modest improvement, with services activity rebounding during the Spring Festival, particularly in tourism and entertainment, but real estate and capital markets remaining weak. A private PMI survey revealed an expansion of 52.1, indicating stronger export orders and overseas demand. At the upcoming National People's Congress, policymakers are expected to set a minimum 4.5% growth target for 2026, with a focus on technology and self-reliance.