China’s factories saw activity slump at the fastest pace in two years in March amid the economic fallout of the Ukraine war and new COVID-19 outbreaks and lockdowns, while manufacturing in other major Asian economies also slowed.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 48.1 last month, down from 50.4 in the previous month.
The slide in the index, where a reading of 50 separates growth from contraction on a monthly basis, marks the steepest decline since February 2020.
A sub-index for new orders declined at the sharpest rate since February 2020, when the first wave of coronavirus cases hit Wuhan.
The release of the data on Friday follows the release a day earlier of the official PMI showing the swiftest contraction in activity since October 2021.
China is grappling with its worst outbreaks of COVID-19 since the pandemic began. On Friday, authorities in the financial capital, Shanghai, extended a lockdown originally scheduled to last 10 days for an undetermined period, following recent lockdowns in Shenyang and tech hub Shenzhen.
‘Waters of recession’
“Just as the global economy showed tentative signs of recovery, the Russia-Ukraine war and the new COVID outbreak in Shanghai have acted as a perfect storm to push the global economy ship towards the waters of recession,” Tim Harcourt, chief economist at the Institute for Public Policy and Governance at the University of Technology Sydney, told Al Jazeera.
“This will lock China substantially out of the global economy until 2024.”
The slowdown in China is likely to have knock-on effects across the region, much of which counts the world’s second-largest economy as the biggest source of trade.
In South Korea, which is also grappling with record coronavirus cases, factory activity slowed last month with new export orders posting the sharpest reduction since July 2020, as companies faced rising prices of oil, metals and semiconductors.
Factory activity also slowed in Taiwan and Vietnam, and contracted in Malaysia, according to PMIs released on Friday.
Bucking the trend, Japan saw manufacturing activity grow at a faster pace compared with the previous month, amid a sharp decline in COVID cases in recent weeks.
But Japan’s export orders slumped as external demand suffered from China’s pandemic restrictions and supply chain disruptions caused by Russia’s war in Ukraine.
Heng Wang, an expert in the Chinese economy at the University of New South Wales, told Al Jazeera China’s strict pandemic policies were likely to put pressure on economic growth at least in the short term.
“In the long term, the landscape is not very clear. Eventually, business confidence will be crucial for China’s economic growth and global economy,” Wang said.
“In the long term, the economic performance is likely to be affected by the future of global value chains. This largely depends on the business decisions. Geo-economic dynamics are changing, and this would affect business decisions in the long term.”