China’s manufacturing activity slumped to its lowest level since February 2020, official data showed on Saturday, the latest sign of economic pain as Beijing pursues its “zero COVID” strategy.
The official purchasing managers’ index (PMI), a key gauge of manufacturing activity, clocked 47.4 last month — below the 50-point mark separating growth from contraction — as authorities said that a “decline in production and demand” has deepened.
The figures come as Beijing’s policy of swiftly stamping out infections with lockdowns and mass testing has been severely challenged by a COVID-19 resurgence.
Photo: AFP
Dozens of cities, including economic powerhouses Shenzhen and Shanghai, have been either fully or partially sealed off since March.
The inflexible approach has inflicted mounting economic pain, with the curbs snarling supply chains and piling up goods at the world’s busiest container port.
National Bureau of Statistics (NBS) senior statistician Zhao Qinghe (趙清河) acknowledged that some enterprises have had to reduce or stop production, while many firms reported an increase in transportation difficulties.
“The production and operation of... enterprises have been greatly affected,” Zhao said, according to an NBS statement that also noted the price indexes for raw materials remain “relatively high.”
The official non-manufacturing PMI plummeted to its lowest level since early 2020 as well, NBS figures showed, as the country braced for a muted Labor Day holiday.
Chinese media group Caixin on Saturday released its own manufacturing purchasing managers’ index, showing a second straight month of deterioration, with the figure dropping from 48.1 to 46.
The Caixin survey, which covers small and medium-sized enterprises, is seen by some as a more accurate reflection of China’s economic situation than official government figures, which more closely track the condition of large state groups.
“COVID control measures have done a number on logistics,” Caixin Insight Group (財新智庫) senior economist Wang Zhe (王喆) said in a statement, adding that firms expressed concerns over how long restrictions would remain in place.
Tech giant Apple Inc on Thursday said that China’s COVID lockdowns were among the factors that would dent its June quarter results by US$4 billion to US$8 billion.
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