China’s factory activity slumps amid tough COVID curbs

Latest sign of economic strain comes after rare mass protests against Beijing’s ‘zero-COVID’ policies.

Forklift drives along aisle in between stocked factory shelves
China's factory activity fell for a second straight month in November, underscoring the economic toll of Beijing's harsh COVID restrictions [File: Tyrone Siu/Reuters]

China’s factory activity fell for a second straight month in November, underscoring the economic toll of harsh “zero Covid” policies that have fuelled rare mass protests in the country.

China’s Purchasing Managers’ Index fell to 48 compared with 49.2 in October, data from the National Bureau of Statistics (NBS) showed on Wednesday.

The index – where the 50-point mark separates growth from contraction – is at its lowest in seven months.

The non-manufacturing PMI, which covers the service sector, fell to 46.7 down from 48.7 in October.

Chinese authorities have imposed tough COVID curbs on cities across the country as nationwide cases hit record highs.

The areas of the country currently under lockdown account for more than one-quarter of gross domestic product, more than at the height of the Shanghai lockdown in April, according to a report from Nomura Holdings Inc. released on Monday.

The latest sign of economic disruption comes after protests against stringent COVID-19 measures erupted in big cities including Beijing, Shanghai, Chengdu and Nanjing.

China has stuck to its ultra-strict “zero-Covid” strategy of lockdowns, mass testing and border controls despite mounting economic and social costs and the rest of the world’s moves towards living with the virus.

“In November, impacted by multiple factors including the wide and frequent spread of domestic outbreaks, and the international environment becoming more complex and severe, China’s purchasing managers’ index fell,” NBS Senior Statistician Zhao Qinghe said in a statement.

Zhao said domestic outbreaks in November caused “production activity to slow down and product orders to fall”, noting “increased fluctuation in market expectations”.

China’s economy is expected to fall short of 3 percent growth in 2022, which would be among its worst performances in decades.

Chinese authorities this month rolled out a flurry of policies to prop up the economy, which is also grappling with a property slump and weakening global demand for Chinese goods.

China’s securities regulator earlier this week lifted a ban on equity refinancing for listed firms, sending shares and bonds of Chinese property companies higher.

Source: News Agencies