China manufacturing index rebounds in March
China’s official manufacturing index rebounded to record an unexpected expansion in March, government data showed on Tuesday, after falling sharply in February as the coronavirus epidemic brought work to a halt across most of the country.
The official manufacturing purchasing managers’ index rose to 52.0 during the month, according to the National Bureau of Statistics, from February’s record low figure of 35.7. The 50-point level separates contraction from expansion. The March reading came in well above economists’ forecasts of 45 compiled by Reuters.
The National Bureau of Statistics said the reading “reflects that more than half of the surveyed enterprises have resumed work and resumed production, better than last month, but it does not mean that China’s economic operation has returned to normal”.
The February PMI figure was the first in a series of record low economic indicators for the first two months of the year, including a 17 per cent year-on-year fall in exports. China’s customs administration and NBS will release March trade and other economic trade data, including first-quarter gross domestic product, in mid-April.
It is now widely expected that data for GDP will mark the first official decline in year-on-year economic output since 1976. Chinese officials, however, have yet to signal that they will back away from their original economic goals for 2020, which included full-year economic growth of at least 5.6 per cent.
While the higher-than-projected PMI figure will be welcomed by Chinese leaders, they must balance a return to normal economic activity against the possibility of new outbreaks as workers return to their factories and offices.
Over recent days, moves by some local governments to reopen movie theatres, tourist attractions and other venues have been reversed. The Chinese government has also adopted strict measures, including a ban on almost all foreign arrivals, as it tries to contain new “imported” infections carried into the country by Chinese nationals and expatriates returning from Europe and the US.
The world’s second-largest economy must contend, too, with a collapse in overseas demand even more severe than what it experienced during the global financial crisis of 2008-09.
“The epidemic is accelerating and spreading around the world, severely impacting global economic growth and trade,” said Zhao Qinghe, the NBS’s senior statistician. “There is also pressure on China’s epidemic control from incoming cases, so the recovery of economic growth and supply chains face new challenges.”
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Last weekend President Xi Jinping paid a high-profile visit to Ningbo, a big manufacturing hub and one of China’s largest ports, accompanied by Liu He, his longtime chief economic adviser and vice-premier. It was Mr Xi’s first trip focused on the economy since the pandemic began in central Hubei province in mid-January.
Mr Xi’s other recent public appearances have been to inspect epidemic prevention efforts in Beijing and Wuhan, capital of Hubei province, during which he told employers to avoid “large-scale lay-offs”. However, the government’s official unemployment estimate for January and February came in at a record 6.2 per cent.
“Some 80 per cent of the 100m migrants that went home to another province [for the lunar new year holiday] have returned to their place of work,” added Bert Hofman, director of the East Asian Institute at the National University of Singapore. “But even for them it is not clear whether they have their jobs back.”