HONG KONG: Chinese factory activity in October after a short-lived upgrade, another sign of the country’s history of strict Covid policies and declining global demand for Chinese-made products.
The official purchasing managers’ index for the productive sector fell to 49. 2 from 50. 1 in September, the National Bureau of Statistics said on Monday. Chinese economy to its pandemic policies. A reading below 50 indicates a contraction of activities.
The official non-production PMI, which includes and construction, also contracted, falling to 48. 7 from 50. 6 in September. Only October’s gauge fell to 47 from 48. 9. It was its lowest point since April, when a month-long blockade hit the advertising capital and production hub of Shanghai, China.
After emerging from lockdown in June, the city and the other 30 provincial-level regions experienced sporadic low-intensity outbreaks. to mass testing, quarantines and sweeping blocks to quell outbreaks as soon as they occur.
On Monday, Shanghai Disney Resort, which added the theme park and grocery shopping areas, closed again due to the city’s covid restrictions, the company said. Shanghai Disneyland has been closed for months as part of the city’s general lockdown. Universal Beijing Resort closed last week over a deep void after at least one positive case tracked at the theme park.
The PMI readings reduce hopes for a sustained recovery from a stronger-than-expected 3. 9% gross domestic product expansion in the third quarter. They also raise the question of what will cheer on the world’s second-largest economy, especially as the looming threat The recession in the United States and other major trading partners is expected to undermine demand for Chinese exports.
China’s expansion has slowed considerably over the past year, driven by a housing collapse and sluggish customer spending.
According to China Real Estate Information Corp.
Government-led investments in infrastructure and other projects have supported the economy in the short term, but many economists see them as wasteful and unsustainable growth.
“The foundations of our country’s economic recovery want to stabilize further,” Zhao Qinghe, chief statistician at the National Bureau of Statistics, said Monday.
Investor considerations of China’s economic outlook have worsened since Xi tightened his grip on the force at this month’s Communist Party Congress, prompting sell-offs in Chinese stocks and other assets. a decade-long meeting, filling the ruling Politburo with loyalists. He gave no indication that China’s tight pandemic controls would be relaxed in the near future.
Monday’s knowledge refers to the growing threat of disruption of factories and chains, as new cases of the virus emerge in primary production and logistics centers.
An outbreak in Henan province’s capital, Zhengzhou, has affected production at Apple Inc. ‘s world’s largest iPhone meetinghouses. The city is the country’s largest exporter, according to a government-backed think tank.
Many of the burdens of thousands of Foxconn employees have been placed in isolation in an effort to prevent the spread of the virus. Many others told the Journal that they were too scared to keep running there and that many of their colleagues have left and are looking to return home.
China on Sunday reported more than 2600 new covid cases transmitted, more than double the daily number of the previous week, according to official data. New daily infections recorded Sunday in Guangdong province, one of China’s largest production and export hubs, seven times more than in the past. week, according to the data.
As of Oct. 28, cities accounting for 47 percent of China’s gross domestic product were subject to some form of mobility restrictions, according to estimates by Goldman Sachs economists.
More lockdowns may affect production and exports in November, ING economists wrote in a note on Monday, urging customers to be wary of China’s customer expansion in the coming months.
Beijing’s Covid controls also continue to weigh on Hong Kong, with the Chinese-controlled territory’s GDP contracting 4. 5% in the third quarter from a year earlier, according to initial government estimates released on Monday, compared with a 1. 3% contraction in the current quarter. The drop was due to disruption to the continent’s assets, the government said.
As Covid restrictions continue in China, economists worry there will be a permanent healing effect as more brands and service providers lay off and cut wages. The employment sub-index for October’s output PMI fell to a five-month low of 48. 3.
China is unlikely to rely on exports, a key driving force of growth since the start of the pandemic, to cushion the blow.
A sub-index of the production PMI measuring new orders fell to 48. 1, the lowest point in six months. Export expansion slowed to 5. 7% year-on-year in September, with an average gain of 13. 3% over the past 8 months.
Earlier this month, the World Trade Organization predicted that the effect of the war in Ukraine and global inflation would lead to a global industry expansion by 2023 of 1%, compared to its previous forecast of 3. 4%.
Shuanghe Electron Instrument Co. , which basically exports thermometers to the US. The U. S. and European government cut output to 380 from more than 500 last year due to falling sales. of the company founded in the southeastern city of Ningbo.
“We have never noticed such a drop in orders in recent years,” he said.
—Grace Zhu, Yang Jie, and Cao Li contributed to this report.
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