China’s factory activity shrank for a second straight month last month, official data showed yesterday, as large swathes of the country were hit by COVID-19 lockdowns and transport disruptions.
The Purchasing Managers’ Index (PMI) — a key gauge of manufacturing in the world’s second-biggest economy — came in at 48, down from October’s 49.2 and well below the 50-point mark separating growth from contraction, Chinese National Bureau of Statistics data showed.
China is the last major economy welded to a “zero COVID” strategy of eliminating outbreaks with strict quarantines and mass testing, even as infections reached record highs last month, dragging down demand and business confidence.
Photo: AFP
“In November, impacted by multiple factors including the wide and frequent spread of domestic outbreaks, and the international environment becoming more complex and severe, China’s purchasing managers’ index fell,” bureau senior statistician Zhao Qinghe (趙清河) said in a statement.
Last month’s figure was lower than the 49 reading predicted by Bloomberg analysts.
The manufacturing PMI has been in contraction territory for all but four months of the year so far, as a summer of heat waves was bookended by COVID-19 lockdowns in major cities during the spring and autumn.
Domestic outbreaks last month caused “production activity to slow down and product orders to fall,” Zhao said, adding that there was “increased fluctuation in market expectations.”
Activity fell at businesses of all sizes, with the PMI for small enterprises hit hardest at 45.6.
The non-manufacturing PMI came in at 46.7, also reflecting a contraction in activity and down from 48.7 points in October.
Zhao said that for transport, accommodation, catering and entertainment in particular “the total industry business volume fell significantly,” as “some regions saw a relatively large impact from the [COVID-19] pandemic.”
Meanwhile, rare nationwide protests have erupted among a population exhausted by almost three years of “zero COVID,” while authorities have offered mixed messages on transitioning away from the strategy.
“The virus situation continues to cloud the economic outlook,” Capital Economics Ltd economist Sheana Yue (余惠悅) said in a note yesterday.
“Most cities have taken to implementing localized lockdowns, similar to the ones we saw in April, which will continue to weigh heavily on services activity,” Yue said.
The IMF might have to slash its growth forecasts for China, IMF managing director Kristalina Georgieva said in Berlin after meeting German Chancellor Olaf Scholz and heads of other international financial organizations on Tuesday, after protests erupted opposing Beijing’s strict policies to combat COVID-19.
“There is indeed the possibility that, in this time of very high uncertainty, we might have to revise these projections down,” Georgieva said, referring to the fund’s forecasts for China.
In October, the IMF cut its projection for the world’s No. 2 economy to 3.2 percent this year as it is weighed down by its disease prevention policies, as well as a slowdown in the property sector.
Chinese leaders have set an annual economic growth target of about 5.5 percent, but many observers say the country is likely to struggle to hit it, despite announcing a better-than-expected 3.9 percent expansion in the third quarter.
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