BEIJING, China: China's manufacturing sector is expected to shrink for a second consecutive month in February, signaling continued weakness in domestic demand and increasing calls for additional stimulus measures to support growth.

A Reuters poll of 21 economists forecasts the official Purchasing Managers' Index (PMI) will register 49.9, slightly improving from 49.1 in January but still below the 50-point mark, which separates growth from contraction.

Despite China achieving its five percent growth target in 2024, the recovery remains uneven. Industrial output and exports have outpaced retail sales, while unemployment remains high, raising concerns over consumer demand.

The Chinese government is expected to maintain the same growth target for 2025, but analysts remain cautious about how quickly policymakers can revive demand—especially as Chinese manufacturers brace for fresh U.S. tariffs under President Donald Trump's trade policies.

To counter these economic pressures, Beijing has pledged increased fiscal spending, higher debt issuance, and further monetary easing.

Trump has escalated trade tensions, announcing a 10 percent tariff hike on Chinese goods set for March 4. This is in addition to the 10 percent tariff imposed in early February over concerns about fentanyl trafficking. This brings total duties to 20 percent, although still lower than the 60 percent tariff Trump previously threatened.

More than half of the Reuters poll respondents expect factory conditions to deteriorate further, with some forecasting a PMI as low as 49.0. Others are more optimistic, with DZ Bank predicting a slight expansion at 50.5.

Investors and businesses are now turning their attention to China's annual parliamentary meeting on March 5, where policymakers are expected to unveil new stimulus measures and set economic targets.

Additional support for the struggling property sector and indebted local governments is also anticipated, as both play critical roles in boosting domestic demand.

Analysts also predict that the Caixin private sector PMI, which focuses on smaller and export-driven manufacturers, will inch up to 50.3 from 50.1 in January. The data will be released on March 3.

For China's factories, stronger domestic spending would help offset external risks, including U.S. tariffs and ongoing geopolitical tensions. However, without a sustained recovery in consumer confidence, the road to economic stability remains challenging.