TOKYO, Japan: Factory activity across much of Asia remained under pressure in August as U.S. tariffs hit exports, private surveys showed, though China offered a rare bright spot with a surprise uptick. The patchy data underline how trade tensions are weighing on the region's already fragile recovery.

Manufacturing powerhouses Japan, South Korea, and Taiwan all reported shrinking activity, while the Philippines and Indonesia managed modest expansions. Analysts said the broader trend reflected both weaker demand and intensifying competition from China, whose producers have kept shipments flowing despite a sluggish domestic economy.

"It's a double-whammy for Asian economies, as they face higher U.S. tariffs and competition from cheap Chinese exports," said Toru Nishihama, chief emerging market economist at Dai-ichi Life Research Institute. "We'll likely see the hit from U.S. tariffs intensify going forward, with countries reliant on U.S.-bound shipments like Thailand and South Korea particularly vulnerable."

China Bucks the Trend
The RatingDog China General Manufacturing PMI, compiled by S&P Global, rose to 50.5 in August from 49.5 in July, topping expectations and crossing the 50 line that separates growth from contraction.

That strength contrasted with an official survey released Sunday showing a fifth straight month of contraction, underscoring how fragile the recovery remains. "Notably, the manufacturing sector is helping the recovery, but this rebound is patchy," said RatingDog founder Yao Yu. "With weak domestic demand, potentially overstretched external orders, and slow profit recovery, the durability of the improvement depends on whether exports truly stabilise and whether domestic demand can pick up pace."

Japan and Korea Stay Weak
Japan's PMI improved slightly to 49.7 in August from 48.9 in July, but remained in contraction for the second straight month. New export orders fell at the fastest pace since March 2024, with firms citing weak demand from China, Europe, and the U.S.

South Korea's PMI was 48.3, up just a touch from July's 48.0, extending seven months of shrinking factory activity. Both countries recently struck trade deals with Washington that lowered U.S. tariffs to 15 percent from higher levels, but analysts said the measures only partially shield their export-heavy industries.

Regional Picture
Taiwan also saw activity weaken, while Southeast Asian peers fared better. Surveys showed the Philippines and Indonesia expanded in August, supported by resilient domestic demand.

Overall, analysts warn that Trump's tariff strategy will ripple beyond direct U.S. trade flows, dragging on global growth and investment. "Looking ahead, we think tariffs will lead to weaker global growth, which will act as a drag on Asia's export-driven economies," said Shivaan Tandon, economist at Capital Economics.