China’s manufacturing activity slows despite COVID-19 restrictions lifted

BEIJING: China’s manufacturing activity contracted sharply in December for the third month in a row, but Beijing eased COVID-19 restrictions at the beginning of the month, according to official figures released on Saturday (31 December).

The Purchasing Managers Index (PMI), a key indicator of manufacturing in the world’s second-largest economy, fell to 47 points from 48 points in November, well below the 50 points that separate growth from contraction. National Statistics Office.

For more than two years, China Zero COVID strategy Hardline measures to eradicate the epidemic with strict quarantines, lockdowns and mass testing have affected the entire global economy.

Beijing abruptly eased pandemic restrictions on December 7, but despite this, the country is still struggling to recover. Rapid increase in COVID-19 cases.

“China’s economic prosperity generally declined in December due to the impact of the epidemic and other factors,” NBS senior statistician Zhao Qinghe said in a statement.

“The epidemic has had a huge impact on business production and demand, staff presence, logistics and distribution.”

The index has not been in positive territory since September and December’s figure was lower than the 47.8 figure predicted by Bloomberg analysts.

However, Zhao expressed optimism in a statement.

“Market trends are expected to recover later as the epidemic situation gradually improves,” he wrote.

China’s zero COVID strategy was based on extensive testing, strict monitoring of movement, and quarantining those who tested positive.

These measures led to unannounced factory closures, disrupted supply chains and forced some companies to shut down permanently.

Meanwhile, the non-manufacturing PMI, which includes services and construction, also contracted further this month, down 41.6 points from 46.7 in November.

The government has set a growth target of around 5.5% this year after achieving a target of over 8% in 2021.

However, many economists now believe the 2022 target is unrealistic.

China will release its annual Gross Domestic Product (GDP) performance in January.