by XIN Yuan

China's factory activity returned to expansion in March, helped by seasonal effects and policy support, though economists warn of renewed pressure ahead.

Data from the National Bureau of Statistics (NBS) on Tuesday showed the official manufacturing PMI rose to 50.4% in March from 49.0% in February, up 1.4 percentage points and back above the 50 mark, the threshold separating expansion from contraction.

WANG Qing, chief macro analyst at Golden Credit Rating, told Jiemian News the rebound largely reflected a reversal of Lunar New Year distortions, with operating rates rising across autos, steel, chemicals and textiles.

He added exports likely remained firm, while high-tech manufacturing and stronger infrastructure investment—following policy signals from China's annual "two sessions"—also supported activity.

Sub-indexes improved. Output rose to 51.4% and new orders to 51.6%, while the raw materials inventory index edged up to 47.7%, indicating a slower drawdown.

Looking ahead, risks are building. XU Tianchen, senior economist at the Economist Intelligence Unit (EIU), said higher oil prices linked to tensions involving Iran are already weighing on refining and chemicals, with potential spillovers to downstream sectors.

Wang expects the PMI to ease to around 49.6% in April, citing typical post-March normalization. He said the outlook will depend on Middle East tensions, export resilience and domestic policy support.

The non-manufacturing PMI rose to 50.1%, with services at 50.2% and construction at 49.3%.