Manufacturing activity in China contracted sharply in December for the third consecutive month, despite the lifting of sanitary restrictions against Covid that heavily penalized the economy, according to official figures published on Saturday.
On December 7, China lifted most of its Covid-19 measures, which had largely protected its population from the virus since 2020. This draconian policy known as “zero covid,” which has largely isolated to countries in the rest of the world, has dealt a heavy blow to the world’s second largest economy.
But despite the end of restrictions, activity is now struggling to restart due to an explosion in patient numbers. In December, the Purchasing Managers’ Index (PMI), a reflection of the health of the industrial world, stood at 47 points against 48 a month earlier, the National Bureau of Statistics (BNS) announced.
This performance is below the expectations of analysts surveyed by Bloomberg (47.8).
A negative index since September
A number below 50 indicates a drop in activity. The index has not been in positive territory since September.
The official, however, says he is considering “a recovery” of the economy in view of “the gradual improvement of the health situation” in China.
The country reported more than 7,000 new positive cases on Saturday and one additional death linked to covid in a population of 1.4 billion. These largely underestimated numbers appear to be totally out of step with the reality on the ground.
Disrupted supply chains
The so-called “Covid zero” strategy was based on widespread screening tests, strict monitoring of movements but also lockdowns and quarantine of positive people. These measures, which led to the unexpected closure of factories, disrupted supply chains and forced some companies to close permanently.
For its part, the non-manufacturing PMI, which includes the services and construction sectors, also contracted more this month, to 41.6 points, compared to 46.7 in November.
The government has set a growth target of around 5.5% this year, following a more than 8% increase in gross domestic product (GDP) in 2021. But many economists now consider this target unrealistic.
China will reveal its performance for all of 2022 in January.
Source: BFM TV
