China Manufacturing PMI Falls to 49.3 Amid Economic Headwinds

High-tech and equipment manufacturing sectors show expansion

High-tech manufacturing remained in expansion territory during October with a PMI of 51.3. Equipment manufacturing also stayed above the 50-point growth threshold at 50.6.

Specific industrial sectors including railway, shipbuilding, and aerospace equipment reported sub-indexes at or above 53.0. Computer, communications, and electronic equipment manufacturing also recorded sub-indexes at or above this same 53.0 level.

Concerns over insufficient demand and economic pressure

According to Zhang Liqun of the China Federation of Logistics & Purchasing, weak demand is intensifying downward pressure on the economy.

Zhang Zhiwei of Pinpoint Asset Management noted that China will need substantial policy support to stimulate domestic demand should external demand decline in 2027.

To improve household confidence and fixed-asset investment, Lu Zhe of Soochow Securities suggested expanding mortgage interest payment subsidies and extending loan interest subsidies for investment projects.

Third-quarter GDP growth reaches 4.5 percent

China’s economy expanded by 4.5 per cent year on year during the third quarter, an increase from the 4.3 per cent recorded in the second quarter, bringing the growth rate for the first three quarters to 4.6 per cent.

China’s trade surplus is on track to exceed 1.2 trillion U.S. dollars for the year due to strong export performance. Zhongji Innolight reported a near tripling of its third-quarter net profit, while Oppein Home reported an 80 per cent plunge in net profit for the same period.

Large manufacturers reported a PMI of 50.2, while medium-sized enterprises recorded 48.4 and small enterprises recorded 47.5.

Central bank to implement new policy rate framework

Beginning 2 November, the People's Bank of China will shift to an overnight policy rate framework, establishing the overnight reverse repo rate as its primary policy rate.

The National Development and Reform Commission is developing a domestic demand expansion strategy for 2026 to 2030 that focuses on public services, direct consumer support, and investment in both physical and human assets.

European market records for BYD and Mercedes

The BYD Seal U achieved a record 12,779 registrations in the European market during September 2026, supported by the use of discounts. In the same month, the Skoda Elroq recorded 12,592 registrations.

The BYD Atto 2, which includes both battery electric and plug-in hybrid versions, reached 11,111 registrations in September 2026, driven by the new plug-in hybrid model. Mercedes also saw record results for its electric vehicles, with the CLA EV reaching 7,206 registrations and the GLC EV recording 7,099 registrations.

Mercedes is currently operating its Bremen factory 24 hours a day, six days a week to produce the GLC EV. The model currently has a waiting list of five to six months.

Competitive pricing for Chinese models in Europe

Several Chinese models are competing in the European midsize market with prices ranging from €40,000 to €50,000. These include the Xpeng G6, Deepal S07, BYD Seal and Seal U, Leapmotor C10, and Zeekr 7 GT. The Jaecoo 7 is 47 per cent electrified in the European C-segment, with 47 per cent of sales attributed to its plug-in hybrid version.

The BYD Atto 2 plug-in hybrid features an 18 kWh battery that provides a 90 km or 56 mi usable range and includes vehicle-to-load capability. The new BYD Dolphin G plug-in hybrid hatchback will use the same powertrain and will be manufactured in Hungary.

A second shift for the iX3 has been implemented by BMW at its Debrecen plant. The vehicle currently has a waiting list of approximately nine months.

Geely Auto plans 2027 entry into Canadian market

Geely Auto Group is scheduled to enter the Canadian automotive market in 2027.