In March 2024, China's manufacturing sector witnessed a rebound after five consecutive months of contraction. The official purchasing managers index (PMI) rose to 50.8, indicating expansion in industrial activities. This upturn followed the Lunar New Year holiday, during which many factories had suspended operations.

The PMI, which measures factory activity on a scale of 0 to 100, had remained below 50 for most of the past year. However, the March expansion suggests a recovery in manufacturing. Senior statistician Zhao Qinghe attributed this improvement to increased market activity as companies resumed production after the holiday.

Despite the positive trend, Zhao acknowledged ongoing challenges for businesses, including intense competition and weak market demand. The government has announced measures to stimulate domestic demand, such as encouraging consumers to replace old appliances and trade in their cars for electric vehicles. Additionally, funding has been allocated for industry upgrades and manufacturing modernization.

The non-manufacturing PMI also rose in March, reaching 53, its highest level since June 2023. This indicates an expansion in the services sector. However, the recovery of China's economy faces obstacles, including a downturn in the real estate industry. The government's economic growth target of 5% for 2024 may prove challenging to achieve.