<div id="readability-page-1">BEIJING: China's factory activity expanded for a second straight month in April, as manufacturers cranked up production to ship goods early to buyers worried the Iran war will further inflate costs, sending new export orders to their strongest level in two years. But the escalating Middle East conflict is laying bare risks in the US$20 trillion economy's production-led growth model, with higher energy prices likely to deter fresh orders once stockpiling fades, even as Chinese exporters enjoy a short-lived boost. The official manufacturing purchasing managers' index (PMI) dipped to 50.3 from 50.4 in March, but held above the 50-mark separating growth from contraction, according to a survey by the National Bureau of Statistics (NBS). It beat a median forecast of 50.1 in a Reuters poll.  The PMI survey's sub-index for production expanded at a slightly faster pace while new export orders rose to 50.3, the highest since April 2024, from 49.1 in March. The sub-index for raw material stockpile rose but remained in contraction. &#34;It will be interesting to see if the official trade data will confirm the resilience of exporters in coming months,&#34; said Zhiwei Zhang, chief economist at Pinpoint Asset Management, noting that the PMI data showed the manufacturing sector was still displaying resilience to external shocks. &#34;The outlook of the export sector is very important for China's economy, as domestic demand has been weak,&#34; he added. The overall new orders sub-index fell to 50.6 from 51.6, suggesting that factories are still having better luck with overseas buyers than their home market. Han Bing, who has managed a warehouse in Dongguan in the southern province of Guangdong serving plastics producers since 2018, said business was &#34;booming&#34; as factories rushed to stockpile supplies to avoid potential price hikes. &#34;Although China is not short of oil, there is an overall shortage in the chemical sector, and factories are nervous about future demand,&#34; he said. &#34;This caused widespread stockpiling on a large scale - every factory wants to stock up.&#34; Input prices remain elevated, with the gauge for raw material prices dipping only slightly to 63.7 from 63.9 in March, the NBS survey showed. But the reading for output prices dropped to 55.1 from 55.4, suggesting manufacturers' continued weakness in pricing power. Price indexes in petroleum, coal and other fuel processing sectors as well as chemicals sectors stayed above 70 for two consecutive months, NBS statistician Huo Lihui said. FACTORIES FACE RISING EXTERNAL RISKS The RatingDog China General Manufacturing PMI, a private survey compiled by S&amp;P Global, came in at 52.2 in April compared with 50.8 in March.  The NBS focuses more on state-owned and large and medium-sized, domestic-facing enterprises, while the private poll is more sensitive to external demand, profiling producers around Shanghai and in China's southern provinces, analysts say. A prolonged conflict in the Middle East will likely weigh on the global economy and squeeze external demand, which has been vital in supporting China's growth as domestic consumption remains subdued. Momentum was solid in the first quarter, with China's GDP growth hitting 5 per cent year-on-year - the top of the government's full-year target range, lessening the need for immediate stimulus. But unemployment rates edged higher and retail sales - a gauge of consumption - continued to underperform industrial output, while growth in goods exports slowed in March. Producer prices ended a years-long deflationary streak in March, but that was partly due to rises in global oil prices and could squeeze the profit margins of businesses in the petrochemical sector.  China's top leaders vowed earlier this week to enhance energy and resource security and &#34;systematically respond to external shocks and challenges&#34;. The non-manufacturing PMI, which includes services and construction, dropped to 49.4 from 50.1 in March, NBS data showed. &#34;The big picture, though, is that even if overall economic momentum was sustained in April, the surveys suggest that this may have been entirely thanks to exports, with domestic demand growth coming under pressure again,&#34; said Julian Evans-Pritchard, head of China economics at Capital Economics.</div>

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<p>China's factory activity expanded for the second consecutive month in April, with the manufacturing PMI at 50.3, indicating growth despite rising risks from the Iran conflict. New export orders reached a two-year high, but concerns over higher energy prices may impact future orders. The overall new orders sub-index fell, highlighting stronger overseas demand compared to domestic markets. While GDP growth was solid at 5% year-on-year, domestic consumption remains weak, prompting calls for enhanced energy security and responses to external challenges. The non-manufacturing PMI dropped to 49.4, indicating pressure on domestic demand.</p>

- In April, China's manufacturing activity expanded for the second consecutive month, driven by increased production and high export orders amid concerns over Middle East conflicts affecting costs.  
- The official manufacturing Purchasing Managers' Index (PMI) slightly decreased to 50.3, indicating growth despite rising energy prices that could suppress new orders.  
- Experts warn that ongoing external risks from the Middle East may pressure global demand, crucial for China's growth as domestic consumption remains weak.

China's factory activity extends expansion, PMI shows, as Iran war risks mount