China's factory activity contracts sharply in February as Lunar New Year disrupts production. The official manufacturing PMI fell to 49, marking a second consecutive month of contraction and missing economist expectations. Readings below 50 indicate economic shrinkage. However, a private survey showed manufacturing PMI surged to 52.1, the strongest level since December 2020, driven by robust new export orders. The divergence reflects different sampling methodologies and timing, with the official survey covering over 3,000 companies at month-end while the private survey focuses on export-oriented manufacturers mid-month. China's economy continues facing deflationary pressures from property sector weakness and labor market challenges. Beijing will announce economic targets this week as policymakers consider policy adjustments.