Next Week in China: 2-6 February 2026

Major Data Releases:

• 2 February: RatingDog to report January Manufacturing Purchasing Managers’ Index (PMI)
• 3 February: Hong Kong to report December retail sales statistics
• 4 February: RatingDog to report January Services PMI
• 5 February: Taiwan to report January Consumer Price Index
• 5 February: Taiwan to report January Producer Price Index
• 6 February: Macau to report Q4 2025 Residential Property Price Index 
• 7 February: China to report January foreign exchange reserves level

Entering February, the coming week will be relatively quiet in terms of major data releases for mainland China.

On PMI trends, we expect the January reading for RatingDog’s manufacturing PMI to come in around 50, likely remaining in expansionary territory in line with the Chinese government’s PMI figure. Given that RatingDog relies on different sampling methods from the official gauge, it is proper to examine its underlying details. China’s December RatingDog Manufacturing PMI registered 50.1, edging up from 49.9 to return above the 50.0 threshold. This marked continued improvement in manufacturing sentiment over the past five months. Domestic new orders were the primary driver of the increase while new export orders declined for the second time in three months, with firms surveyed citing weak external demand.

For producer prices, input costs continued to rise on the back of higher raw material prices, particularly metals. Despite mounting cost pressures, Chinese manufacturers further reduced sticker prices to support sales and accelerate inventory destocking. Procurement activity remained broadly stable in December and did not show a significant response to the rise in new orders. Labour conditions softened further, with manufacturing employment falling for a third consecutive month. Sample firms attributed the decline mainly to employee resignations as well as layoffs related to cost control and business restructuring.

The mismatch between stronger sales and constrained production capacity pushed the backlog of work to its fastest growth pace in three months. To meet delivery requirements, businesses continued to draw down on finished goods inventories, resulting in a second straight monthly decline. Business confidence weakened from November and remained below its long‑term average, reflecting caution at yearend.  

Equity market performance was mixed over the past week. As of Thursday, 29 January, the MSCI China Index rose by 3.18 per cent while the Shanghai Composite gained 0.53 per cent. Meanwhile, the Shenzhen Component Index slipped by 0.97 per cent and the ChiNext Index declined 1.34 per cent. Large‑cap stocks outperformed both small‑ and mid‑cap names, with value shares slightly ahead of growth counterparts.

Looking ahead, near‑term market divergence is likely to persist, though it may gradually narrow. In the short run, several factors continue to support differentiated performance. High‑beta sectors have maintained notable trading momentum and remain attractive to incremental capital, suggesting that risk appetite may not decline rapidly. A relatively stable-to-strong Chinese yuan and a broadly accommodative liquidity environment also provide support for higher‑beta or more volatile assets. With the Lunar New Year holiday approaching (15-23 February) and the economic data calendar entering a temporary quiet period, high‑sentiment sectors face limited pressure for verification – that is, whether optimism towards these industries are well-supported – thus allowing a continued uptrend in valuations. In addition, the overseas technology cycle continues to provide a favourable benchmark: as AI model applications progress towards implementation, expectations for medium‑term productivity gains continue to support valuation gains in the high-tech space.

The post‑holiday period will see the release of full‑year 2025 and this quarter’s earnings reports from listed companies. As these disclosures unfold, market pricing dynamics are likely to shift away from risk appetite‑driven valuation expansion and refocus on the interplay between earnings delivery and profit growth expectations.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.