China’s factory activity shrank at the sharpest pace since the COVID-19 pandemic first emerged about three years ago, after Beijing’s abrupt reversal of counter-epidemic measures last month set off a wave of COVID-19 infections across the country.
The official purchasing managers’ index (PMI) fell to 47.0 last month from 48.0 in November, the National Bureau of Statistics said on Saturday.
Economists in a Reuters poll had expected the PMI to come in at 48.0. The 50-point mark separates contraction from growth on a monthly basis.
Photo: AP
The drop was the biggest since the early days of the pandemic in February 2020.
The data offered the first official snapshot of the manufacturing sector after China removed the world’s strictest COVID-19 restrictions last month. Cumulative infections likely reached 18.6 million last month, UK-based health data firm Airfinity said.
Analysts said surging infections could cause temporary labor shortages and increased supply chain disruptions.
Weakening external demand on the back of growing global recession fears amid rising interest rates, inflation and Russia’s invasion of Ukraine could further slow China’s exports, hurting its massive manufacturing sector and hampering an economic recovery, they said.
“Most factories I know are way below where they could be this time of year for orders next year. A lot of factories I have talked to are at 50 percent, some are below 20 percent,” said Cameron Johnson, a partner at Tidal Wave Solutions, a supply chain consulting firm.
“So even though China is opening up, manufacturing is still going to slow down because the rest of the world’s economy is slowing down. Factories will have workers, but they will have no orders,” Johnson said.
The bureau said 56.3 percent of surveyed manufacturers reported that they were greatly affected by the epidemic last month, up 15.5 percentage points from the previous month, although most also said they expect the situation to gradually improve.
In 2021, inflation-adjusted GDP reached 114.92 trillion yuan (US$16.66 trillion), up 8.4 percent from 2020. GDP expanded 3 percent in the first nine months of last year, compared with China’s official full-year goal of around 5.5 percent.
The World Bank expects growth for last year of 2.7 percent.
The non-manufacturing PMI, which looks at services sector activity, fell to 41.6 from 46.7 in November, the bureau’s data showed, also marking the lowest reading since February 2020.
The official composite PMI, which combines manufacturing and services, declined to 42.6 from 47.1.
“The weeks before Chinese New Year are going to remain challenging for the service sector as people won’t want to go out and spend more than necessary for fear of catching an infection,” Capital Economics head Asia economist Mark Williams said.
“But the outlook should brighten around the time that people return from the Chinese New Year holiday — infections will have dropped back, and a large share of people will have recently had COVID and feel they have a degree of immunity,” he said.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
BIG BUCKS: Chairman Wei is expected to receive NT$34.12 million on a proposed NT$5 cash dividend plan, while the National Development Fund would get NT$8.27 billion Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday announced that its board of directors approved US$15.25 billion in capital appropriations for long-term expansion to meet growing demand. The funds are to be used for installing advanced technology and packaging capacity, expanding mature and specialty technology, and constructing fabs with facility systems, TSMC said in a statement. The board also approved a proposal to distribute a NT$5 cash dividend per share, based on first-quarter earnings per share of NT$13.94, it said. That surpasses the NT$4.50 dividend for the fourth quarter of last year. TSMC has said that while it is eager
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
RSS