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China Faces Cost-Push Inflation Trap; Margin Squeeze Deepens Across China

The Middle East conflict is now feeding directly into China's manufacturing economy through higher imported energy and raw-material costs. That external shock is colliding with an already fragile industrial recovery, raising input prices, extending delivery times, and threatening profit margins across the factory sector. While China's manufacturing activity remained in expansion territory in March, the combination of slowing momentum and intensifying cost pressures points to a more difficult operating environment in the months ahead.

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