BEIJING- China’s factory activity likely remained in contraction for the fifth consecutive month in September, as weak domestic demand and rising global trade barriers continue to dog the world’s second-largest economy.

A Reuters poll of 22 economists estimated the official purchasing managers’ index (PMI) will come at 49.5, higher than August’s reading of 49.1, but below the 50-point threshold that separates growth from contraction in activity.

The mood in the manufacturing sector has been depressed for months by tumbling producer prices and dwindling orders.

In the latest pain point, China’s industrial profits plunged 17.8 percent in August year-on-year, the biggest decline this year and a sharp reversal from the 4.1 percent  growth in July.

The continued downturn in factory activity highlights the need for bold stimulus efforts from the government, as policymakers face growing pressure to meet China’s 2024 growth target of around 5 percent.

After a shaky start to the second-half of the year, China’s economy continued to show weakness with recent data broadly missing expectations.

In an unusual September Politburo meeting focused on macroeconomic issues this week, China’s top leaders acknowledged the economy was facing “new problems” and called for fresh policies to more “forcefully” stimulate growth.

The meeting also urged efforts to stop the declines in the beleaguered property market and to deploy “necessary” fiscal spending.

These pledges came just two days after China unveiled its most aggressive stimulus package since the COVID-19 pandemic, a sign official are growing increasingly anxious and keen to reverse the economic downturn.

The government is also expected to issue about 2 trillion yuan ($285.16 billion) of special sovereign bonds to support consumption and local government debt issues, Reuters reported on Thursday, echoing economists’ calls for more fiscal supports.

China’s economic recovery has relied heavily on export strength, but looming western trade curbs increasingly cloud the outlook.

The United States is set to implement steep tariff hikes on Chinese products, including electric vehicles (EVs), starting Friday, while the European Union is expected to make a final decision on potential EV tariffs soon.

The private sector Caixin PMI is forecast at 50.5, analysts polled by Reuters say. 

China’s central bank on Friday lowered interest rates and injected liquidity into the banking system as Beijing assembled a last-ditch stimulus assault to pull economic growth back towards this year’s roughly 5 percent target.

More fiscal measures are expected to be announced before China’s week-long holidays starting on Oct. 1, after a meeting of the Communist Party’s top leaders showed an increased sense of urgency about mounting economic headwinds.

Reuters reported on Friday, citing sources, that megacities Shanghai and Shenzhen are planning to lift key home purchase restrictions in coming weeks, joining a long list of smaller cities that have done so to ease a years-long property crisis.

On the heels of the Politburo huddle, China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of fresh fiscal stimulus, two sources with knowledge of the matter have told Reuters.

Capital Economics chief Asia Economist Mark Williams estimates the package “would lift annual output by 0.4 percent relative to what it would otherwise have been.”