China’s latest PMI readings strengthened across industry and services in September, with both private and official surveys pointing to firmer activity. The private-sector RatingDog Manufacturing PMI rose to 52.1 from 51.5 in August, beating expectations of 51.7 and reaching its highest level since April. The official manufacturing PMI also improved, returning to expansionary territory.
In the official data, the manufacturing PMI increased to 50.1 from 49.8, matching forecasts and moving back above the 50 threshold after two months below it. Services-linked measures also advanced: the official non-manufacturing PMI climbed to 50.2 from 49.0, exceeding the 49.2 consensus, while the composite PMI rose to 50.7 from 49.5, indicating broader momentum across the economy.
China’s Economic Activity Rebounds Heading Into October 2026
We are seeing a strong turnaround in China’s economic activity as we head into October 2026. The latest manufacturing gauges show a clear return to expansion, with the private-sector RatingDog index hitting 52.1 and the official index rising to 50.1. This broad-based improvement suggests that the recent manufacturing slowdown may finally be behind us.
Trading Strategies for Renewed Chinese Strength
We recommend that derivative traders position themselves for a sustained rally in Chinese equities over the coming weeks. Buying near-the-money call options on the Hang Seng Index or major Chinese ETFs offers a high-upside way to capture this momentum. Historically, similar turnarounds in Chinese economic activity, such as the major policy-driven market surge in late 2024, have led to rapid double-digit gains in equity benchmarks.
We also suggest looking at currency and commodity derivatives to capitalize on this renewed Chinese demand. Traders should consider buying call options on the Australian Dollar against the US Dollar, as a stronger Chinese economy traditionally boosts proxy currencies. Additionally, copper and iron ore futures options are highly sensitive to Chinese industrial expansion and present attractive entry points right now.
To protect against sudden market shifts, we advise using structured option spreads rather than outright long positions. Implied volatility in Chinese-related assets is likely to rise, making bull call spreads an excellent way to limit risk while maximizing potential returns. We must closely monitor upcoming credit and liquidity data over the next fortnight to confirm if this industrial rebound is fully supported.
