Group 1: Report Industry Investment Rating - Not provided in the content Group 2: Core Viewpoints of the Report - In March 2026, the manufacturing PMI returned to the expansion range, with the production and demand sides both improving. The non - manufacturing and comprehensive PMIs also returned to the expansion range [2][3] - The improvement in demand on the market's demand side was stronger than that on the supply side, but the differentiation between domestic and foreign demand may continue. Domestic demand in the market may remain insufficient in the short term, and policy support is needed to boost demand [4] - There are positive signals in prices, but the gap between purchase prices and ex - factory prices has widened, which may compress corporate profit margins [5] - The PMIs of the construction and service industries have both increased, and the service industry PMI has returned to the expansion range. The construction industry remains confident in its future development [5] - The target range for the 10 - year treasury bond is expected to be 2 - 3%, with a central value of 2.5% [5] Group 3: Summary by Relevant Catalogs 3.1 PMI Data in March - The manufacturing PMI in March was 50.4%, a 1.4 - percentage - point increase from the previous value, higher than the market expectation. The non - manufacturing PMI was 50.1%, a 0.6 - percentage - point increase, and the comprehensive PMI was 50.5%, a 1.0 - percentage - point increase [2][3] - After the Spring Festival, as enterprises resumed work and production, the production index increased by 1.8 percentage points, the new order index increased by 3.0 percentage points, and the new export order index increased by 4.1 percentage points. The production and operation activity expectation index was 53.4%, a 0.2 - percentage - point increase [4] 3.2 Price Situation - The purchase price of major raw materials increased by 9.1 percentage points to 63.9%, and the ex - factory price increased by 4.8 percentage points to 55.4%. The ex - factory price index has remained in the expansion range for three consecutive months [5] 3.3 Industry Situation - The construction industry PMI was 49.3%, a 1.1 - percentage - point increase from the previous value, and the service industry PMI was 50.2%, a 0.5 - percentage - point increase. The business activity expectation index of the construction industry was 50.5%, a 0.4 - percentage - point decrease but still in the expansion range [5] 3.4 Bond Market Viewpoint - The target range for the 10 - year treasury bond is expected to be 2 - 3%, with a central value of 2.5%. The economic recovery is accelerating, and factors such as inflation, monetary policy, and real estate need to be considered [5]

Core Viewpoint - The significant rebound in the March PMI is attributed to the fading effects of the Spring Festival and accelerated demand recovery [3][9]. Manufacturing PMI - The manufacturing PMI rose to 50.4% in March, up 1.4 percentage points from the previous month, reflecting a recovery post-Spring Festival [2][3]. - The new orders index increased by 3 percentage points to 51.6%, indicating stronger demand recovery compared to previous years [3][16]. - The production orders index only rose by 1.8 percentage points to 51.4%, suggesting slower recovery in production due to delayed resumption of work [3][16]. Industry Analysis - The consumer goods sector saw a larger PMI increase of 2 percentage points to 50.8%, indicating a faster demand recovery compared to other sectors [4][20]. - The equipment manufacturing and high-tech manufacturing PMIs increased by 1.7 and 0.6 percentage points to 51.5% and 52.1%, respectively, but showed weaker production performance [4][21]. Non-Manufacturing PMI - The non-manufacturing PMI rose to 50.1%, with the construction sector's PMI increasing by 1.1 percentage points to 49.3%, which is lower than the previous year's recovery rate [4][24]. - The construction project resumption rate was 62%, down 2.6 percentage points from the same period in 2025, indicating slower recovery in the sector [4][24]. Future Outlook - The focus on expanding domestic demand and promoting consumption is expected to enhance the recovery of domestic demand, which may outpace external demand [5][34]. - However, rising oil prices due to geopolitical risks could negatively impact manufacturing profitability, with a transmission lag of about 3-4 months [5][34]. Regular Tracking - The manufacturing PMI showed a recovery, with the new orders index rising significantly [6][43]. - The service sector PMI increased slightly to 50.2%, but the new orders index fell by 0.4 percentage points to 45.3% [6][52]. - The construction sector's new orders index improved marginally by 1.3 percentage points to 43.5% [6][54].

Core Viewpoint - The article highlights the recovery signals in the Chinese economy post-Spring Festival, with key indicators such as the manufacturing PMI and non-manufacturing business activity index returning to expansion territory, indicating improved economic confidence and activity levels [3][5]. Manufacturing Sector Recovery - In March, the manufacturing new orders index rose to 51.6%, up 3 percentage points from the previous month, indicating a return to expansion after two months below 50% [5]. - The new export orders index improved significantly to 49.1%, an increase of 4.1 percentage points, reflecting better external demand [5]. - The production index for manufacturing rose to 51.4%, up 1.8 percentage points, signaling a steady recovery in production as companies resumed operations post-holiday [5]. - Employment in the equipment manufacturing and high-tech sectors showed improvement, with indices rising to near 50%, indicating stabilization in new growth sectors [6]. - The production expectations index for March was 53.4%, suggesting increased confidence among manufacturing firms regarding market developments [6]. Price Dynamics and Material Costs - The purchasing volume index rose to 50.9%, indicating expansion in raw material procurement activities, while the purchasing price index surged to 63.9%, reflecting a significant increase in raw material prices [7]. - The ex-factory price index reached 55.4%, marking a new high since April 2022, driven by rising demand and material costs [7]. - The rapid increase in basic raw material prices, with the purchasing price index exceeding 70%, has led to higher costs for downstream manufacturing sectors [8]. - The geopolitical situation in the Middle East has contributed to rising costs in oil and chemical sectors, impacting overall manufacturing costs and potentially affecting production rhythms [9]. Non-Manufacturing Sector Insights - The non-manufacturing business activity index for March was 50.1%, reflecting a slight increase, with construction and service sectors showing varied performance [11]. - The construction activity index rose to 49.3%, indicating a slight recovery post-Spring Festival, while service-related sectors faced challenges due to rising costs from geopolitical tensions [12]. - The retail, accommodation, and catering sectors experienced a decline in activity levels, suggesting a need for further monitoring of consumer demand recovery [13].

Group 1: Manufacturing PMI Insights - The manufacturing PMI for March rose to 50.4%, exceeding market expectations, indicating a recovery driven by external demand[3] - The new orders index increased by 3.0 percentage points (pp) to 51.6%, while the production index rose by 1.8 pp to 51.4%, reflecting a clear trend of supply recovery driven by demand[7] - The PMI for large enterprises remains high, but the recovery in March was primarily driven by small and medium-sized enterprises[7] Group 2: External Demand and Production Recovery - The new export orders index improved significantly, rising by 4.1 pp to 49.1%, indicating a strong recovery in external demand[7] - High-frequency data, such as container shipping metrics, also showed robust recovery in March, suggesting increased resilience in domestic exports[7] - The production index's increase was less than seasonal expectations, indicating cautious production choices by enterprises[7] Group 3: Price Dynamics and Inventory Management - The main raw material purchase price index surged by 9.1 pp to 63.9%, the highest level since May 2022, reflecting significant price pressures[7] - Despite rising input costs, companies are hesitant to increase inventory levels, as indicated by the raw material and finished goods inventory indices not exceeding seasonal trends[7] Group 4: Non-Manufacturing Sector Performance - The non-manufacturing PMI rose to 50.1%, with the construction PMI at 49.3%, still in contraction territory and below seasonal expectations[7] - The service sector PMI increased by 0.5 pp to 50.2%, but also underperformed against seasonal norms, indicating weaker consumer demand in sectors like tourism[7] Group 5: Economic Outlook and Policy Implications - The recovery in manufacturing PMI suggests a positive economic outlook driven by external demand, reducing the necessity for preemptive policy measures[7] - The improvement in external demand may lead to a virtuous cycle, potentially easing the improvement cycle for domestic industries like construction[7]

Group 1: Manufacturing Sector Insights - The manufacturing PMI rose to 50.4% in March, indicating a seasonal rebound post-Spring Festival, surpassing the market expectation[5] - The new orders index increased significantly, becoming the highest among the five sub-indices of PMI, driving the overall PMI growth[5] - The raw material purchase price index reached 63.9%, while the factory price index was at 55.4%, marking an 8.5 percentage point gap, the largest since May 2022[9] Group 2: Price Dynamics and Profitability - The widening "scissors gap" between raw material purchase prices and factory prices may negatively impact corporate profits, particularly affecting downstream consumption[10] - Historical data shows that similar price dynamics in March and April 2022 led to increased upstream profits while downstream consumption profits declined[10] - The manufacturing sector's price indicators are crucial to monitor, as they are not part of the PMI composition but significantly influence future trends[9] Group 3: Non-Manufacturing Sector Recovery - The non-manufacturing PMI returned to the expansion zone at 50.1%, but the recovery pace is slower than that of the manufacturing sector[16] - Construction-related activities, particularly in civil engineering, showed improvement, with the business activity index rising above 55%[16] - The government plans to implement more proactive macro policies to stimulate domestic demand, which may support the construction sector further[18] Group 4: Risk Factors - Key risks include slow recovery of consumer confidence, policy implementation falling short of expectations, and potential escalations in trade tensions and geopolitical issues[20]

Manufacturing Sector - March manufacturing PMI improved to 50.4%, up 1.4 percentage points month-on-month, indicating a return to expansion[3] - The production index rose by 1.8 percentage points to 51.4%, while new orders increased by 3.0 percentage points to 51.6%[14] - Industrial raw material prices have rebounded significantly, with March PPI expected to rise by approximately 0.3% year-on-year[20] Non-Manufacturing Sector - Construction PMI increased by 1.1 percentage points to 49.3%, benefiting from the gradual resumption of projects post-holiday[22] - Service sector PMI rose to 50.2%, a 0.5 percentage point improvement, although new orders remain weak[30] Economic Outlook - Q1 GDP is projected to grow by approximately 5.0% year-on-year, supported by AI demand and fiscal spending[6] - The growth forecast includes primary, secondary, and tertiary industries at approximately 3.5%, 5.2%, and 5.0% respectively[34] - Input inflation may pressure profits in downstream enterprises, necessitating timely policy responses to support economic recovery[33] Risks - Potential risks include unexpected policy changes and a possible recession in the U.S. economy impacting domestic exports[35]

Group 1: PMI Overview - The manufacturing PMI for March is 50.4%, an increase of 1.4 percentage points from the previous month, indicating a return to the expansion zone[1] - The production index for manufacturing rose to 51.4%, up 1.8 percentage points, reflecting accelerated manufacturing activity[3] - The new orders index for manufacturing increased to 51.6%, a rise of 3 percentage points, marking a return to the expansion zone after two months below 50%[3] Group 2: Economic Conditions - The composite PMI output index is 50.5%, up 1.0 percentage points from last month, indicating overall improvement in business activities[8] - The non-manufacturing business activity index is at 50.1%, an increase of 0.6 percentage points, ending two consecutive months below 50%[7] - The equipment manufacturing new orders index rose over 3 percentage points to above 53%[1] Group 3: Price Trends and Cost Pressures - The raw material purchase price index surged to 63.9%, a significant increase of 9.1 percentage points, indicating rising costs in manufacturing[5] - The ex-factory price index rose to 55.4%, up 4.8 percentage points, remaining in the expansion zone for three consecutive months[6] - The geopolitical situation in the Middle East has contributed to rising costs, particularly in the petrochemical sector, affecting the supply chain[6] Group 4: Employment and Business Sentiment - The employment index remains low at 48.6%, indicating ongoing employment pressures and insufficient hiring willingness[21] - The business expectations index for manufacturing rose to 53.4%, up 0.2 percentage points, reflecting optimism among manufacturers[2] - Large enterprises have a PMI of 51.6%, while small and medium enterprises have PMIs of 49% and 49.3%, respectively, showing marginal improvement in smaller firms[4]

Economic Growth and Inflation - Input inflation is characterized by rising international raw material prices impacting domestic consumer goods, reflected in the declining ratio of CPI to PPIRM since 2012[4] - Monthly GDP growth for January-February reached 5.2%, with expectations for Q1 GDP to exceed 5.0%[4] - The construction sector's employment decline is a key factor in rising unemployment rates, necessitating increased infrastructure investment to stabilize employment[4] Sector Performance - The service sector's growth is notably low, while industrial production is primarily supported by external demand, indicating insufficient domestic demand[4] - High-tech industries are growing significantly faster than in the past two years, but manufacturing upgrades and AI development are not creating enough jobs, keeping unemployment high[4] Infrastructure Investment - Infrastructure investment saw a significant increase from -15.2% in December to 9.8% at the start of the year, indicating a focus on stabilizing employment rather than growth[4] - If employment stabilization policies continue, construction alone could boost GDP by approximately 0.4 percentage points in Q2 compared to Q4 of the previous year[4] Market Implications - The bond market may face pressure in Q2 as GDP growth is expected to exceed 5%, driven by construction and industrial recovery[4] - The current economic environment suggests that changes in funding demand will have a greater impact on the funding landscape than central bank policy adjustments[4]

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - In March 2026, the manufacturing PMI rebounded beyond expectations, indicating an economic recovery, but the recovery strength is average and the expectations are cautious. Without considering external uncertainties, the prices of domestically - priced commodities are expected to rise. The manufacturing PMI in April 2026 is likely to decline, which is a crucial observation window [4][5][6]. - In March 2026, the non - manufacturing PMI rose, but multiple sub - items are at historically low levels, and the non - manufacturing industry is still in the bottom - building process. The construction industry is still in a downward trend, but the sales price sub - item has bottomed out [29][32]. 3. Summary by Relevant Catalogs Part 1: Review of China's Manufacturing and Non - manufacturing PMI Data Tables - Manufacturing PMI: In March 2026, all sub - items of the manufacturing PMI increased compared to February. The significant increases include the purchase price of main raw materials (up 9 to 63.9), ex - factory price (up 4.8 to 55.4), import (up 4.2 to 49.8), new export orders (up 4.1 to 49.1), and new orders (up 3 to 51.6) [3][4]. - Non - manufacturing PMI: In March 2026, the business activity of non - manufacturing PMI was 50.1, up 0.6 from the previous month. The sub - items with relatively large increases were new export orders, input prices, sales prices, and delivery time. The sub - items with relatively large decreases were domestic demand, inventory, business activity expectations, and employees [3][29]. Part 2: March Manufacturing PMI Reflects Economic Service Beyond Expectations - Manufacturing PMI reached 50.4 in March 2026, up 1.4 from the previous month, higher than the market expectation of 50.1, and above the 50 boom - bust line again after two months. All sub - items increased, indicating an economic recovery. However, some key sub - items are still below 50, and some sub - items are at the second - lowest or lowest levels in the same period since 2018. The economic recovery is influenced by factors such as the arrival of the demand peak season, economic improvement, and price increases due to the Middle East conflict. The recovery strength is average, and expectations are cautious. The prices of domestically - priced commodities are expected to rise. In April 2026, the manufacturing PMI is likely to decline, which is a crucial observation window [4][5][6]. Part 3: Multiple Sub - items of March Non - manufacturing PMI are at Historically Low Levels - In March 2026, the non - manufacturing PMI business activity was 50.1, up 0.6 from the previous month and higher than the expected 49.9, returning above 50 again after two months. The sub - items of non - manufacturing PMI showed mixed trends. The new orders and domestic demand sub - items decreased against the season, indicating that the non - manufacturing industry is still in the bottom - building process. Some sub - items are at the lowest or second - lowest levels in the same period over the years. The construction industry PMI shows a downward trend, but the sales price sub - item has bottomed out, suggesting that the housing price may be stabilizing, but the sustainability needs to be observed [29][32].

Group 1: Manufacturing PMI Insights - The manufacturing PMI for March 2026 is 50.4%, an increase of 1.4 percentage points from the previous month, indicating a return to the expansion zone[3] - The production index rose by 1.8 percentage points to 51.4%, while the new orders index increased by 3 percentage points to 51.6%, both indicating expansion[4] - The new export orders index improved by 4.1 percentage points to 49.1%, and the import index rose by 4.2 percentage points to 49.8%, suggesting a recovery in internal demand[4] Group 2: Price and Inventory Trends - The raw material purchase price index surged by 9.1 percentage points to 63.9%, indicating increased upstream cost pressure[22] - The factory price index increased by 4.8 percentage points to 55.4%, driven by rising commodity prices and accelerated procurement activities[22] - The finished goods inventory index rose by 0.9 percentage points to 46.7%, while the raw materials inventory index increased by 0.2 percentage points to 47.7%[22] Group 3: Non-Manufacturing Sector Performance - The non-manufacturing business activity index for March is 50.1%, a slight increase of 0.6 percentage points from the previous month[5] - The construction activity index is at 49.3%, up by 1.1 percentage points, while the services activity index is at 50.2%, an increase of 0.5 percentage points[5] - Key sectors such as railway transport and financial services have business activity indices above 55%, indicating strong performance[5] Group 4: Business Size Analysis - Large enterprises' PMI increased by 0.1 percentage points to 51.6%, remaining in the expansion zone[15] - Medium and small enterprises saw PMIs rise by 1.5 and 4.5 percentage points to 49.0% and 49.3%, respectively, showing significant improvement but still below the critical point[15] - The recovery in manufacturing is uneven, with smaller enterprises facing more operational pressures compared to larger ones[15]