China’s Manufacturing Sector Unexpectedly Shrinks in July

China’s manufacturing sector unexpectedly contracted in July, as indicated by the Caixin PMI, which fell to 49.8 from 51.8 in June. This reading missed the anticipated 51.4 and signifies the first contraction since October. The decline in manufacturing activity was consistent with the official PMI data, which also reported a third consecutive month of contraction. The Caixin PMI, reflecting smaller private firms in Southern China, reveals a broader slowdown compared to the official data from larger state-run enterprises. Additionally, the European Union’s import tariffs on China’s electric vehicle sector have contributed to this downturn. While there are discussions of potential stimulus measures from Chinese officials, the impact of these policies remains uncertain, with analysts emphasizing the need for effective execution to drive economic recovery.