China’s dominant manufacturing sector was hit by a wave of Covid infections in December as the world’s second largest economy lifted its controversial lockdown restrictions.
Survey data compiled from purchasing managers in China’s manufacturing industry pointed to another month of contraction in December, with the final measure slipping to 49 from 49.4. Any level below 50 suggests output has fallen.
The slump came after Beijing relaxed stringent lockdown measures in late November that had been in place for most of the year in big cities, causing a surge in Covid-19 cases that disrupted work in factories.
China’s manufacturing sector accounts for more than a fifth of the world’s factory output and the country is the main production hub for companies such as Apple.
Duncan Wrigley, at Pantheon Macroeconomics, the consultancy, said: “The overall short-term picture for China’s economy is still dark as it struggles with mountains of Covid infections.”
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Exports and new orders dipped in December, according to the private Caixin/Markit PMI survey. The data is in line with official Chinese PMI data, which showed a dip in December to 47 from 48. Combined, the two surveys paint the worst picture for Chinese industry since 2009.
The Chinese economy is in the midst of its worst growth since the outbreak of the pandemic in early 2020.
Sheana Yue, at Capital Economics, said the reopening of the economy after the easing of restrictions would be another “blow” for growth as the global economy takes a hit in 2023. She said that reported cases of the virus were likely to spread into rural regions in the spring. “A combination of recurrent virus waves, a deepening global downturn and weakness in the property sector suggest that the economy is likely to remain weak in the coming months,” she said.