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China's factory activity dips to lowest level in two years

China's factory activity dips to lowest level in two years
File photo of a factory in China. (Photo: AFP/Jade Gao)

BEIJING: Manufacturing activity in China has hit its lowest level since February 2020, official data showed on Saturday (Apr 30), as the country's worst COVID-19 resurgence since the early days of the pandemic drags on the economy.

The Purchasing Managers' Index (PMI), a key gauge of manufacturing activity, came in at 47.4 in April - below the 50-point mark separating growth from contraction - as authorities said that a "decline in production and demand" has deepened.

The figures come as Beijing digs in on a zero-COVID strategy that involves stamping out clusters as they emerge through targeted lockdowns and mass testing.

But the restrictions have left dozens of cities either fully or partially locked down in recent months, most notably the eastern economic powerhouse Shanghai.

The city's 25 million residents have been largely confined to their homes for the past month, although authorities are showing signs of gradually loosening some rules.

China's virus curbs have snarled supply chains amid a lack of truckers, while goods have piled up at the world's busiest container port.

National Bureau of Statistics (NBS) senior statistician Zhao Qinghe acknowledged that some enterprises have had to reduce or stop production, while many firms have reported an increase in transportation difficulties.

"The production and operation of ... enterprises have been greatly affected," Zhao said, according to an NBS statement that also noted the price indexes for raw materials remain "relatively high".

The official non-manufacturing PMI plummetted to its lowest level since early 2020 as well, NBS figures showed, as the country braces for a muted Labour Day holiday.

On Saturday, Chinese media group Caixin released its own manufacturing purchasing managers' index, showing a second straight month of deterioration, with the figure dropping from 48.1 to 46.0.

The Caixin survey, which covers small and medium-sized enterprises, is seen by some as a more accurate reflection of China's economic situation than the official government figures, which more closely track the condition of large state groups.

"COVID-19 control measures have done a number on logistics," said Caixin Insight Group senior economist Wang Zhe in a statement.

Caixin also noted that firms expressed concerns over how long COVID-19 restrictions would remain in place.

On Thursday, tech giant Apple warned that China's COVID-19 lockdowns were among the factors that would dent its June quarter results by US$4 billion to US$8 billion.

Source: AFP/mi

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