China’s official manufacturing index rebounded to register an unexpected expansion in March, government data revealed on Tuesday after falling sharply in February as the coronavirus epidemic put an end to work in most of the country.
According to the National Bureau of Statistics, the official index of purchasing managers in the manufacturing sector rose to 52.0 in the month, from a record 35.7 in February. The 50 point level separates contraction from expansion. The March reading is much higher than economists’ forecasts of 45 compiled by Reuters.
The National Bureau of Statistics said the reading “reflects that more than half of the companies surveyed have resumed work and resumed production, better than last month, but that does not mean that China’s economic performance has returned to the normal”.
February’s PMI was the first in a series of record economic indicators for the first two months of the year, including a 17% drop in exports year over year. China’s customs and NBS authorities will release trade and other economic data for March including the first quarter gross domestic product in mid-April.
GDP data is now widely expected to mark the first official year-over-year decline in economic output since 1976. However, Chinese authorities have yet to signal that they will fall back from their original economic targets for 2020. , which included annual economic growth of at least 5.6%.
Although the higher-than-expected PMI figure is welcomed by Chinese leaders, they must balance the return to normal economic activity and the possibility of further outbreaks as workers return to their factories and offices.
In recent days, initiatives by some local governments to reopen cinemas, tourist attractions and other places have been reversed. The Chinese government has also adopted strict measures, including a ban on almost all foreign arrivals, as it attempts to contain new “imported” infections transported into the country by Chinese nationals and expatriates returning from Europe and states -United.
The world’s second largest economy is also facing a collapse in foreign demand that is even more severe than what it experienced during the 2008-2009 global financial crisis.
“The epidemic is accelerating and spreading worldwide, severely affecting global economic growth and trade,” said Zhao Qinghe, chief statistician of the NBS. “There are also pressures to fight the epidemic in China from the new cases, so that the resumption of economic growth and supply chains faces new challenges.”
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Last weekend, President Xi Jinping paid a high-level visit to Ningbo, a major manufacturing center and one of the largest ports in China, accompanied by Liu He, his longtime chief economic adviser and Vice Prime Minister. It was Xi’s first economy-focused trip since the pandemic started in central Hubei Province in mid-January.
Xi’s other recent public appearances have included inspecting epidemic prevention efforts in Beijing and Wuhan, capital of Hubei Province, during which he told employers to avoid “mass layoffs”. However, the government’s official estimate of unemployment for January and February hit a record 6.2%.
“About 80% of the 100 million migrants who have returned home to another province [for the lunar new year holiday] have returned to their place of work, ”added Bert Hofman, director of the Institute for East Asia at the National University of Singapore. “But even for them, it is not clear if they have found their jobs.”