According to official figures released on Saturday, China’s manufacturing activity fell sharply in December for the third straight month, despite Beijing easing COVID restrictions earlier in the month.
The Purchasing Managers’ Index (PMI) — a key indicator of manufacturing in the world’s second-largest economy — was at 47 points, down from 48 in November and well below the 50-point mark that separates growth from contraction, according to data from the Federal Bureau of Investigation Statistics.
For more than two years, China had insisted on a zero-COVID strategy to stamp out outbreaks with strict quarantines, lockdowns and mass testing — an uncompromising policy that resonated throughout the global economy.
Beijing abruptly eased pandemic restrictions on Dec. 7, but despite this, the country is still struggling to recover due to a surge in COVID cases.
“In December, China’s economic prosperity has generally declined due to the impact of the epidemic and other factors,” Zhao Qinghe, senior statistician at the NBS, said in a statement. “The epidemic has had a significant impact on business production and demand, staff presence, logistics and distribution.”
The index has not been in positive territory since September and the December number was lower than the 47.8 predicted by Bloomberg analysts.
However, Zhao struck an optimistic note in his statement.
“As the epidemic situation gradually improves, the market trend is expected to pick up later,” he wrote.
China’s zero-COVID strategy was based on widespread testing, strict surveillance of movement, and quarantine for those who tested positive.
These measures, which led to unannounced factory closures, disrupted supply chains and forced some companies to close permanently.
For its part, the non-manufacturing PMI, which includes services and construction, also fell further this month to 41.6 points from 46.7 in November.
The government has set a growth target of about 5.5 percent for this year after hitting its target of over 8 percent in 2021.
But many economists now consider the target for 2022 to be unrealistic.
China is due to announce its gross domestic product (GDP) performance for the year in January.
© 2023 AFP