China’s manufacturing activity fell to its lowest level since February 2020, official data showed on Saturday, the latest sign of economic pain as Beijing persistently seeks its response against zero Covid. The official PMI, a key indicator of manufacturing activity, stood at 47.4 in April – below the 50-point mark separating growth from shrinkage – as authorities said the “decline in production and demand “has deepened. The evidence comes as Beijing’s policy of rapidly eradicating infections with lockdown and mass testing has been severely challenged by the resurgence of the Omicron-sponsored pandemic. Dozens of cities, including financial centers such as Shenzhen and Shanghai, have been completely or partially shut down in recent months. The rigid approach – even as most people learn to live with the virus – has caused growing financial pain, with curbs cursing supply chains and allowing goods to pile up in the world’s busiest container port. Zhao Qinghe, senior statistician at the National Bureau of Statistics (NBS), acknowledged that some companies had to cut or stop production, and many companies reported an increase in transfer difficulties. “The production and operation of … businesses have been greatly affected,” Zhao said, according to an NBS statement, which also noted that raw material price indices remained “relatively high.” The official non-manufacturing PMI also fell to its lowest level since early 2020, NBS data showed as the country prepares for a Labor Day holiday.
“The situation is very worrying”
On Saturday, Chinese media group Caixin released its own index of industrial executives, showing its second consecutive month of decline, falling 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 official government figures, which closely monitor the situation of large government groups. “COVID-19 control measures have done a lot in logistics,” said Wix Zhe, senior economist at Caixin Insight Group. Caixin also noted that companies have expressed concern about how long the COVID restrictions will remain in force. Speaking to Al Jazeera from Shaghai, Dan Wang, chief economist at Hang Seng Bank, said the situation was “extremely worrying”. “I’m very worried about where this is going because the current lockdown in Shanghai seems to be over after this May holiday, which means most people can probably walk to their neighborhoods, but for most factories on the East Coast it is not in “Very good condition,” said Wang. “Given what is happening in Shanghai, many other cities are taking precautionary measures – even with a COVID case an entire city can be locked up. We can consider a situation where 30 cities can be locked at the same time. “This is terribly annoying for the supply chain.” On Thursday, technology giant Apple warned that lockdowns in China for COVID were among the factors that would reduce the results of the June quarter by $ 4-8 billion.
