China’s factory activity contracted at the steepest pace since the pandemic emerged nearly three years ago, after Beijing’s abrupt reversal of anti-epidemic measures this month unleashed a wave of Covid-19 infections across the country. the country.
The official purchasing managers’ index (PMI) fell to 47.0 in December from 48.0 in November, the National Bureau of Statistics (NBS) said. The previous one was the biggest drop since the first days of the pandemic, in February 2020.
Economists, in a Reuters poll, had expected the PMI to come in at 48.0. The 50-point mark separates contraction from growth.
The data provided the first official snapshot of the manufacturing sector after China lifted restrictions to combat Covid-19 that were the strictest in the world in early December.
Cumulative infections likely reached 18.6 million in December, health data firm Airfinity estimated. Analysts said the rise in infections could cause temporary labor shortages and further disruptions in the supply chain.
It was reported last week that Tesla planned to run a scaled-down production schedule at its Shanghai plant in January, extending scaled-down production that began this month into the new year.
Weakening foreign demand, due to growing fears of a global recession against a backdrop of rising interest rates, inflation and the war in Ukraine may further slow China’s exports, hurting its huge manufacturing sector and hampering economic recovery.
NBS said that 56.3% of manufacturers surveyed reported that they were badly affected by the epidemic in December. The data represented an increase of 15.5% compared to the previous month, although most also commented that they expected the situation to gradually improve.
The non-manufacturing PMI, which tracks activity in the service sector, fell to 41.6 from 46.7 in November, according to the statistics office data, also marking the lowest reading since February 2020.
For its part, the official composite PMI, which combines manufacturing and services, fell to 42.6 in December from 47.1 in November.
China’s GDP would be around 17.4 bdd
Chinese President Xi Jinping said in his New Year’s Eve speech that China’s economic output in 2022 is expected to exceed $17.4 trillion.
In 2021, inflation-adjusted Gross Domestic Product (GDP) grew 8.4% and expanded 3% in the first nine months of 2022, against China’s official full-year target of around 5.5 percent. The World Bank expects a growth of 2.7 percent by 2022.
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