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China: manufacturing activity at its lowest level in two years

Beijing (awp / afp) – Manufacturing activity in China fell in March to a two-year low, weighed down by anti-Covid health measures, according to an independent index released Friday.

The purchasing managers ’activity index (PMI), calculated by IHS Markit for Caixin media group, stood at 48.1 points last month, against 50.4 in February.

A number below 50 indicates a contraction of activity.

Analysts were expecting a less significant decline (49.1) in this index, which the markets closely follow.

China is facing the worst outbreak of Covid-19 cases since the outbreak in the country began in late 2019 in recent weeks.

Omicron’s pressure is undermining Covid’s communist power zero policy, with thousands of new cases a day.

Thousands of Chinese are limited, especially in the northeast of the country, the cradle of the automotive industry, the technology city of Shenzhen (south) and Shanghai, the economic capital of 25 million people.

As a result, activity was strongly punished: the biggest drop in new orders came in March since February 2020, when China’s economy was almost shut down at the start of the epidemic, Caixin points out.

Orders for export fell at the fastest rate in 22 months, due to restrictions.

Exports are one of the engines of the Chinese economy. They have so far benefited from the global recovery and the foreign demand for Covid protection products, such as masks, in the context of the pandemic.

Russia’s invasion of Ukraine has also created more uncertainty over trade and logistics, companies surveyed by Caixin said.

In addition, production costs rose in March at its fastest pace in five months.

The Caixin index followed the same trend in March as the government index but more significantly: the official PMI posted last month at 49.5 points, after 50.2 in February.

The Caixin-Markit survey, which mainly surveys SMEs, is said to give a more accurate picture of the economy. The official figure focuses on large state-owned companies.

afp / al

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