China's Manufacturing Index Reflects Ongoing Demand Growth Challenges

Li Chen
03 Jun, 2025
Hong Kong

Stocks in China and Hong Kong rose, and investors reviewed the latest update on the manufacturing sector. 

The Hang Seng index added more than 1%, and the mainland-focused CSI 300 index edged higher by 0.5%. 

Mainland investors returned from a three-day holiday, and investors pinned their hopes on the possible talks between leaders of China and the U.S., which could expedite a trade agreement.

Financial markets have been whiplashed over the last four trading sessions after the U.S. placed additional visa restrictions on Chinese students and limited the exports of advanced artificial intelligence chips. 

China retaliated with a control on rare earth mineral exports to the U.S., souring the trade environment between the two largest economies.  

Investors reviewed the latest updates on the manufacturing sector, and the private survey, which has a larger group of exporters, confirmed ongoing weakness. 

The Caixin manufacturing purchasing managers' index eased to 48.3 in May from 50.4 in April, S&P Global reported on Tuesday. 

The index of manufacturing activities decreased to the lowest since September 2022, as the U.S.-focused exporters struggle to adjust to a constantly changing U.S. trade policy.  

The official manufacturing purchasing managers' index released over the weekend showed a contraction for the second consecutive month. 

The PMI edged up to 49.5 in May compared to 49.0 in April, indicating activities declined at a slower pace. 

 

China Indexes and Stocks 

The Hang Seng index increased 1.1% to 23,408.32, and the CSI 300 index rose 0.5% to 3,858.78. 

Electric vehicle makers advanced in active trading in the hopes of a boost in exports to Mexico, Russia, and Brazil. 

Li Auto jumped 6.7% to $117.10, BYD increased 1.7% to HK $392.0, and Xpeng Inc. increased 0.7% to HK $75.60. 

China Merchants Bank added 2.6% to $49.35, Bank of China advanced 2.7% to HK $4.62, and China Construction Bank advanced 2.8% to HK $7.11. 

HSBC increased by 1% to HK$93.45.