Almost all provinces in China have been affected by an epidemic since March.
Manufacturing activity in China fell to its lowest level since February 2020 in April, weighed down by an epidemic outbreak of Covid cases weighing on the country’s economy, according to an official index released on Saturday.
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The Purchasing Managers’ Index (PMI), a key indicator of manufacturing activity, was 47.4 in April. A number above 50 indicates an expansion of activity and below it indicates a contraction.
Authorities said the “drop in production and demand” had deepened. Since March, almost all provinces in China have been hit by an epidemic outbreak, the strongest since early 2020.
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Beijing intends to continue its zero-Covid policy, which consists of restricting movement and imprisoning tens of millions of people, particularly in the north-east of the country and in Shanghai, China’s economic capital.
Its 25 million residents have been largely confined to their homes since early April. These tough measures have blocked supply chains due to a shortage of truckers while goods have been piling up at its port, one of the largest in the world, and the capital entry and exit point for goods in China.
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Zhao Qinghe, a senior statistician at the National Bureau of Statistics (NBS), acknowledged that some companies have had to reduce or halt production, while many companies have reported increasing transportation difficulties.
“The production and operations of enterprises have been severely impacted,” Zhao Qinghe said, according to a statement from the BNS, which also noted that commodity price indices remain “relatively high.” The PMI index for non-manufacturing goods also fell to its lowest level since the beginning of 2020, according to figures from the SNB.
On Saturday, the PMI index released by Caixin media group also showed a second straight month of deterioration, with the figure falling to 46.0 from 48.1 last month. The Caixin figure, which mainly surveys SMEs, is seen by some as a more accurate reflection of China’s economic health than the government’s official figures, which more closely track the situation of large state-owned companies.
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“Covid measures have wreaked havoc (in terms of) logistics,” Wang Zhe, an economist at Caixin Insight Group, said in a statement. Caixin also noted that companies have expressed concerns about the length of the restrictions to combat Covid.
On Thursday, tech giant Apple warned that Covid-related restrictions in China would be among factors cutting its revenue by $4 billion to $8 billion in the third quarter of its staggered fiscal year (April to June).
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