China’s manufacturing sector is flashing warning signs. Factory activity contracted for a seventh straight month in October, underscoring strain in an economy once powered by relentless industrial growth, The Financial Times reports.

The official purchasing managers’ index slipped to 49, missing expectations and marking the longest manufacturing slump in nearly a decade. A reading below 50 signals contraction.

Weak domestic demand, fierce price competition, and persistent deflationary pressures are eroding profitability across China’s factory floor. For Beijing, the problem cuts deep. Manufacturing has long been China’s growth engine — and a key tool in its geopolitical contest with the U.S.

Exports are the swing factor. Headline shipments rose 8.3% year-over-year in September — the fastest pace in six months — helped by a pivot to markets outside the U.S.

But exports to the U.S. fell 27% the same month, highlighting a deepening decoupling even as global sales improve.

Now, policymakers face a paradox: push for “high-tech self-reliance” while trying to stabilize an industrial base battered by low demand and overcapacity.

Authorities have begun cracking down on price wars in sectors like EVs and solar panels, but those efforts risk cooling production even further.

The slump also reshapes the calculus of the U.S.-China trade war. Though Washington and Beijing recently agreed to pause some tariffs and export controls, the ceasefire looks fragile.

China’s slowing output weakens its export leverage, potentially giving U.S. policymakers fresh justification for maintaining pressure on Chinese industries.

Despite the gloom, a few bright spots remain — high-tech and equipment manufacturing inched up in October, and consumer-facing industries benefited from a weeklong holiday.

Still, analysts say the overall picture is bleak: China’s industrial momentum is fading.