HONG KONG — China's factory activity expanded in March, ending two straight months of contraction, according to the government. The official manufacturing purchasing managers index rose to 50.4 in March from 49 in February, the National Bureau of Statistics reported.

The PMI reading of 50.4 in March was the highest reading in one year, the National Bureau of Statistics reported. The PMI is measured on a scale of 0 to 100, with readings above 50 indicating expansion.

The manufacturing expansion comes as China, the world's second-largest economy after the U.S., faces multiple economic challenges. A years-long slump in China's property sector has weighed on the country's economic growth and weakened domestic consumption and investment demand in China.

Chinese leaders unveiled an economic growth target of 4.5% to 5% for 2026 in early March. China's economic growth target for 2026 was the lowest since 1991, down from the 2025 target of around 5%.

China has relied on growing exports, especially to Southeast Asia and Europe, to support its economy. China's trade surplus in 2025 was a record $1.2 trillion despite higher U.S. tariffs. China's exports to the U.S., its largest trading partner, declined over the past months.