China’s manufacturing engine is sputtering. The June PMI came in at 49.7. That’s three months in a row below the 50 line. Below 50 means contraction. The number ticked up slightly from May’s 49.5, but it’s still red. The new orders index barely cleared 50.2. Export orders are stuck at 47.7. That’s 14 months of contraction in outbound demand. The factories are still running, but the gears are grinding slower.
Profits are falling off a cliff. Industrial earnings dropped 9.1% year over year in May. That’s the worst monthly hit since October. The five-month cumulative profit figure is down 1.1% compared to last year. State-owned firms are down 7.4%. Private firms are down 1.5%. The only group in the green is foreign-invested manufacturers, and they’re barely holding at 0.3%.
🇨🇳 CHINA’S FACTORIES: FALLING HARDER THAN METEORITES
China’s factory report card just came in and… yikes. 3rd straight month of shrinkage.
Even with government boosts and a slight bump in orders, jobs are still disappearing, and profits are tanking harder than your GPA after… https://t.co/fhBZ3vQ5sq pic.twitter.com/zUaLG8ATIT
— Mario Nawfal (@MarioNawfal) June 30, 2025
⚠️Container shipments from China to the US are still FALLING:
Shipments from China to the US just hit a 2-year low, according to real-time cargo data.
The traffic is down ~25% since February.
This is all despite the 90-day trade truce agreed in May.👇https://t.co/8jaiXsEIB0
— Global Markets Investor (@GlobalMktObserv) June 29, 2025
Jobs are disappearing. The employment sub-index fell again in June. That’s now four straight months of decline. Factory owners are cutting shifts. Some are freezing hiring. Others are closing lines altogether. The property crisis is still dragging on household spending. Deflation is creeping in. Consumer prices have fallen four months in a row. That’s not a soft patch. That’s a signal.
Exports are showing a pulse. May shipments rose 4.8% year over year. But exports to the US dropped 34.5%. The only reason the headline number is green is because of a surge in shipments to Southeast Asia and the EU. The truce with Washington helped. Tariffs were rolled back from 145% to 51.1%. But the window is narrow. The 90-day pause expires in August. Importers are front-loading orders before the next tariff wave hits.
Ports are jammed. China just moved 6.7 million containers in a single week. That’s a record. Air cargo is spiking too. Over 2,100 domestic cargo flights were logged in the last week of June. Rail freight is also up. The logistics system is running hot. But it’s not organic growth. It’s a scramble to beat the clock.
Beijing is still pushing the consumer economy narrative. Premier Li Qiang says the shift from manufacturing to consumption is underway. But the numbers don’t back it. Retail sales rose 6.4% in May. That’s the best since late 2023. But it’s not translating into factory orders. Prices are falling. Inventories are rising. The gap between policy and reality is widening.
The government’s 2025 growth target is 5%. That’s still technically in reach. But the foundation is cracking. The manufacturing sector is 27% of GDP. If it keeps shrinking, the rest won’t hold.
Sources:
https://www.cnbc.com/2025/06/27/china-industrial-profits-plunge-9point1percent-in-may.html
https://www.cnbc.com/2025/06/09/china-may-trade-data-exports-imports-after-tariff-ceasefire-.html