China’s business activity continues to shrink for 5 months
2023.01.03 12:35
China’s business activity continues to shrink for 5 months
Budrigannews.com – A private survey found on Tuesday that Chinese manufacturing activity fell for a fifth month in a row in December. This came as the country struggled with an unprecedented rise in COVID-19 cases after loosening some restrictions meant to stop the virus from spreading.
In December, the PMI read 49.0, which was higher than expected (48.8) but lower than last month’s reading of 49.4. A reading below 50 indicates contraction, and the manufacturing PMI was in contraction territory for the fifth month in a row in December.
The released data, which also revealed that the manufacturing sector in the nation contracted in December, were largely consistent with the data.
Because it is so closely linked to China’s massive exports, the manufacturing sector is a good indicator of the country’s economy. In 2022, output slowed significantly as a result of worsening overseas demand for Chinese goods and persistent disruptions caused by COVID-related headwinds.
Last month, both manufacturing supply and demand continued to decline. In a note, Senior Economist Wang Zhe of Caixin Insight Group stated, “The fallout from the pandemic was a drag on production and sales, with the subindexes for output and total new orders remaining below 50 for the fourth and fifth consecutive months, respectively.”
The country is experiencing a significant increase in infections despite the fact that it has begun to relax its stringent COVID prevention measures. Due to the country’s increased virus infection and death rate, analysts anticipate that this trend will delay a wider reopening.
Nevertheless, markets anticipate a possible reopening in the country this year. After a significant selloff earlier in the year, traders piled heavily into Chinese debt and stocks toward the end of 2022 because they perceived the market as a bargain.
According to the Caixin data, this was also reflected in Chinese manufacturers’ increased business optimism. After the country began easing COVID-19 restrictions in December, businesses are preparing for an eventual economic recovery.
Also recently, President Xi Jinping said that China’s economy would grow by 4.4% in 2022, which is much higher than what the markets were expecting. However, he also mentioned that the COVID-19 pandemic will increase the country’s challenges in the coming months.
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