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China manufacturing contracts in July as export-driven rebound runs out of road

7/31/2026

China's factory sector, which staged a second-quarter recovery riding a surge in export orders, swung unexpectedly back into contraction in July as that cross-border tailwind began to unwind.

The reversal comes against the backdrop of a global manufacturing cycle that had shown tentative signs of stabilization.

It raises a straightforward question: whether domestic demand is deep enough to fill the gap left when export momentum fades.

The second-quarter rebound and what ended it The export rush that powered China's manufacturing recovery through the second quarter did not hold into July.

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