As Covid problems spread, China’s industry activity decreased
According to official data released on Wednesday, China’s industry activity decreased for the second consecutive month in November as a result of the Covid-19 lockdowns and transportation delays that affected vast areas of the nation.
According to data from the National Bureau of Statistics, the Purchasing Managers’ Index (PMI), a crucial indicator of manufacturing in the second-largest economy in the world, registered at 48.0, down from October’s reading of 49.2 and significantly below the 50-point threshold separating growth from contraction (NBS).
According to AFP, despite infections reaching record highs this month and lowering demand and business confidence, China is the only major economy that is steadfastly committed to a zero-Covid approach of eradicating outbreaks through stringent quarantines and widespread testing.
“China’s purchasing managers’ index declined in November, hit by a number of causes including the wide and frequent spread of local epidemics, and the international situation becoming more complex and harsh,” NBS senior statistician Zhao Qinghe stated in a statement.
The November number was less than the 49.0 reading that Bloomberg experts had projected.
With the exception of four months this year, the manufacturing PMI has been in contraction territory. This is because a summer of heat waves was sandwiched between Covid lockdowns in major cities in the spring and the fall.
Zhao noted “greater fluctuation in market expectations” and claimed that domestic outbreaks in November led to “production activity to slow down and product orders to plummet.”
All sizes of firms had a decline in activity during the month, with the PMI for small businesses suffering the most, at 45.6.
The non-manufacturing PMI dropped from 48.7 points in October to 46.7 points in November, likewise indicating a decrease in activity.
Zhao claimed that because “certain places witnessed a rather high impact from the pandemic,” “the whole industry business volume declined dramatically” for the industries of transportation, lodging, catering, and entertainment in particular.
Despite announcing a better-than-expected 3.9 percent expansion in the third quarter, many observers believe China will struggle to meet its annual economic growth target of approximately 5.5 percent.
A populace that has been subjected to over three years of zero-Covid has risen in rare statewide protests, and the government has given conflicting instructions on how to abandon the tactic.
According to Sheana Yue, China economist at Capital Economics, “the viral crisis continues to darken the economic picture.”
Localized lockdowns, like the ones we saw in April, are now being implemented in most cities, which will continue to have a negative impact on service activity, according to Yue.
A worldwide slowdown is placing pressure on China’s export-focused firms, she cautioned, and “there is no upside that can offset the setback.”
The non-manufacturing PMI also showed a decline in activity, falling from 48.7 points in October to 46.7 points in November.
For the industries of transportation, lodging, catering, and entertainment, in particular, Zhao claimed that because “certain places witnessed a rather high impact from the pandemic,” “the whole industry business volume declined dramatically.”
Despite reporting a better-than-anticipated 3.9 percent expansion in the third quarter, many analysts think China will find it difficult to reach its approximate 5.5 percent annual economic growth target.
A population that has endured zero-Covid for more than three years has erupted in unusual statewide protests, and the administration has issued confusing directives on how to stop using the strategy.
The viral issue “continues to cloud the economic picture,” according to Capital Economics expert Sheana Yue.