China’s manufacturing activity falls despite lifted COVID restrictions

China’s manufacturing activity contracted sharply in December for the third straight month, according to official figures released on Saturday, despite Beijing easing COVID restrictions earlier in the month.

The purchasing managers’ index (PMI), a key indicator of manufacturing in the world’s second-largest economy, stood at 47 points, down from 48 in November and well below the 50-point mark that separate growth from contraction, according to data from. the National Statistics Office.

For more than two years, China had insisted on a zero-Covid strategy to rid the beaches of strict quarantines, lockdowns and mass testing, a hardline policy that reverberated throughout the global economy.

On December 7, Beijing abruptly eased pandemic restrictions, but despite this, the country is still struggling to recover due to a rise in COVID cases.

“In December, due to the impact of the epidemic and other factors… China’s overall economic prosperity has declined,” NBS senior statistician Zhao Qinghe said in a statement. “The epidemic has had a significant impact on business production and demand, staff presence, logistics and distribution.”

The index has not been in positive territory since September, and the December figure was lower than the 47.8 reading expected by Bloomberg analysts.

Zhao, however, struck a note of optimism in his statement.

“As the epidemic situation gradually improves, the market trend is expected to pick up later,” he wrote.

China’s zero-covid strategy was based on widespread testing, strict movement tracking and quarantine for those who tested positive.

Those measures, which led to unannounced plant closures, disrupted supply chains and forced some companies to close permanently.

For its part, the non-manufacturing PMI – which includes the services and construction sectors – also contracted more this month, to 41.6 points from 46.7 in November.

The government has set a growth target of around 5.5 percent this year, after reaching its target of more than 8 percent by 2021.

But many economists consider the 2022 target to be unrealistic.

China will release its gross domestic product (GDP) for the year in January.

23 of 2023 AFP

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