Beijin, manufacturing activity contracted in March, official data indicated Thursday, as the country’s largest COVID epidemic in two years resulted in random lockdowns and production closures.
According to statistics from the National Bureau of Statistics, the Purchasing Managers’ Index (PMI) fell to 49.5, well below the 50-point threshold between expansion and contraction.
This was the first drop in prices in five months, and Bloomberg’s analysts thought it would be even less.
The decline comes as the government fights coronavirus outbreaks in important industrial areas like Shenzhen in the south and Changchun in the north.
“In recent years, concentrated outbreaks have occurred in a number of locations around China, NBS senior statistician Zhao Qinghe said Thursday in a statement.
If there has been a big rise in world geopolitical tension, Chinese businesses’ production and operations have been affected, he said.
China has been recording thousands of viral cases every day for the last few weeks, after almost two years of almost no infections inside the country.
This has thrown its “zero-Covid” approach into disarray.
Certain businesses temporarily slowed or halted production as a result of COVID, which also impacted logistical movements.
The non-manufacturing PMI also fell to 48.4 from 51.6, because the influenza outbreak had a big impact on the service sector, which is where most of the jobs are.
Nomura’s senior economist in China, Lu Ting, said that “further lockdowns and social distancing measures” would lead to big drops in the PMI index.
“Beijing’s intention to pursue a zero-COVID policy for combating the infectious Omicron type would very certainly have a severe economic impact on the Chinese economy, “he told AFP.”