This episode contains segments on:
- China’s July 2026 manufacturing and non-manufacturing PMI data
- The RatingDog July 2026 China General Manufacturing PMI
- China’s July 2026 Politburo meeting
- MOFCOM issues excess capacity position paper
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Read more:
China’s July 2026 manufacturing and non-manufacturing PMI data
https://www.stats.gov.cn/sj/zxfb/202607/t20260731_1964253.html
The RatingDog July 2026 China General Manufacturing PMI
https://www.pmi.spglobal.com/Public/Home/PressRelease/402fe5cf21e94c2d83e7c7b5cc6fe2ea
China’s July 2026 Politburo meeting
https://www.news.cn/20260730/13ecbfd4cd9b455281a0649232b98ad0/c.html
MOFCOM issues excess capacity position paper
https://www.mofcom.gov.cn/syxwfb/art/2026/art_9484491dee094b25bb54656fdef72a93.html
Transcript:
RUI: Hello and welcome to China ShortCuts,
XINHE: the European Chamber’s weekly catchup on China’s business landscape.
RUI: This episode was recorded on 5th August 2026.
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RUI: Data released by the National Bureau of Statistics on 31st July showed that manufacturing activity in China contracted in July, ending four-months of continuous expansion.
XINHE: The Official Manufacturing Purchasing Managers’ Index, or PMI, stood at 49.2 points in July, the lowest level recorded since February 2026. All subindices covered by the index showed contraction. In particular, the new orders subindex dropped sharply, falling from 51.2 points in June to 48.5 points, indicating that demand for manufactured products declined at a faster pace than their supply.
RUI: The National Bureau of Statistic’s Non-Manufacturing PMI—which comprises of services and construction activity—also registered contraction in July. The index came in at 49 points during the seventh month of the year. Construction activity was down by two percentage points at 47%—the lowest figure registered for this metric since February 2020, during the beginning of the COVID-19 outbreak—while the Service Industry Business Activity Index stood at 49.3 points, down 1.1 points on June 2026’s reading.
(MUSIC)
RUI: Findings of a private survey released on 3rd August found that operating conditions in China’s manufacturing sector continued to improve, albeit at a slower pace, in July 2026.
XINHE: The RatingDog China Manufacturing Purchasing Managers Index stood at 50.9 points in July. This marks the eighth consecutive month that the index has stayed above the 50-point threshold, which indicates a continued improvement in the manufacturing segment of China’s economy.
Total new orders increased for a fourteenth consecutive month, while new export business activity rose for the first time in three months, returning back to expansion territory. At the same time, a reduction of purchasing activity was seen for the first time since November 2025.
RUI: Conversely, the official PMI data issued last week by the National Bureau of Statistics showed a contraction in manufacturing activity for July, with demand dipping more than production. The discrepancy between the official and the RatingDog PMI—while partly due to methodology—is also likely influenced by the fact that more export-orientated companies are included in the RatingDog PMI sample.
(MUSIC)
RUI: On 30th July, the Political Bureau of the Communist Party of China Central Committee met to evaluate the country’s economic performance and detail China’s key economic tasks for the second half of 2026.
According to an official readout, such tasks include: stepping up macro policy support and accelerating fiscal spending; stimulating domestic demand and service-related consumption; creating a healthier market environment; address ‘involution-style’ competition; fostering mutually beneficial international economic and trade cooperation; and vigorously developing trade in services.
It was also decided at the meeting that the fifth plenary session of the 20th Central Committee of the Communist Party of China will be held this coming October.
XINHE: It is positive that a number of the issues discussed at the July plenary session are related to concerns of European companies operating in China, including the need to address several structural challenges facing the Chinese economy.
These points do not represent new policy objectives, but rather a reiteration of previous objectives outlined in key policy documents, including the Premier’s 2026 Government Work Report and the 15th Five-year Plan for National Economic and Social Development. This reiteration suggests that there will be no major deviation in policy priorities for the second half of the year, and that additional action plans to address these issues can be expected.
(MUSIC)
RUI: On 28th July, the Ministry of Commerce (MOFCOM) published China’s Position on the So-called Excess Capacity Issue, a standalone document that outlines the country’s formal stance on the topic of ‘excess capacity’, a moniker for ‘overcapacity’.
The document offers a counternarrative to concerns relating to the potential distortive impact that surging exports of Chinese goods could have on third-countries’ industrial competitiveness and resilience, which it argues are being used to “stok[e] up protectionism”.
XINHE: In this regard, the paper argues that:
- there is no necessary connection between industrial subsidies and excess capacity; that “large exports or a trade surplus are not synonymous with excess capacity”;
- arguments that “China’s inadequate domestic demand gives rise to excess capacity” are counter factual; and
- market competition is the most effective mechanism to curb disorderly capacity expansion.
It also explicitly rejects the notion of China shock 2.0—which has gained traction in the EU and US in recent months—noting instead that industrial modernisation of China equates to a “China opportunity 2.0” for the rest of the world.
RUI: The position paper is likely to hold little weight among European officials, as it does not acknowledge the EU’s legitimate concerns related to its growing trade imbalance with China, which include the threat it poses to European overall economic security, its industrial resilience and the rate at which manufacturing jobs are being lost.
XINHE: At the same time, it is positive that the document calls for “[s]trengthening multilateral and bilateral dialogue on industrial policies”, something the European Chamber is also advocating for. It is important for the EU and China to engage in frank discussions regarding the use of industrial policies, with a view to aligning on if and when it is legitimate to use industrial policy to ensure economic security and resilience, and the areas where more openness, reliability and predictability can and should be provided for businesses.
(MUSIC)
XINHE: Thanks for listening, and don’t forget to tune in again next week.
RUI: In the meantime, please find useful links in the episode notes.
RUI: Listen to the full episode on our WeChat account, or your preferred podcast platform.