Reboot measures buoy factory activity
Factory activity in China gained ground in March, after a slump in February, as government measures to reboot the economy helped enterprises weather the novel coronavirus storm, according to official data released on Friday.
The country’s total added value of industrial enterprises above a designated size went down by 1.1 percent on a yearly basis in March, 12.4 percentage points lower than the decline seen in the first two months, while industrial value rose by 32.13 percent in March on a monthly basis, said the National Bureau of Statistics.
Ying Xiwen, deputy director of the regional economics research center of China Minsheng Bank Research Institute, said the indicators point to a substantial recovery.
“China’s industrial enterprises have made significant strides and taken effective measures on coronavirus epidemic prevention and are resuming normal operations,” Ying said.
“The industrial recovery has also been helped by the demand revival in downstream markets.”
Among the 41 industries surveyed by the NBS, 16 sectors witnessed annual increases in their value-added industrial output, while others saw declines.
NBS data also indicated that production of basic raw materials and new products rose steadily in March.
Output of natural gas, nonwoven fabrics and chemical medicine materials went up by 9.1 percent, 6.1 percent and 4.5 percent respectively. Production of automatic vending and ticket machines, electronic components and integrated circuits rose by 35.3 percent, 16.2 percent and 16 percent respectively during the same period.
The steady growth was seen in high-tech manufacturing, which rose 8.9 percent on a yearly basis, with output of computers, telecommunications equipment and other electronic equipment increasing by 9.9 percent.
Yu Chengdong, CEO of Chinese tech giant Huawei’s consumer business group, told China Daily that the company’s smartphone sales saw a 70-percent year-on-year growth in March.
“Though sales declined in February, we saw growth in January and March, which helped maintain an expansion in the first quarter,” Yu said. The company has taken a string of measures like mandatory temperature scanning and compulsory mask wearing to safeguard the health of its employees.
Yu expected revenue from its consumer business group, which includes smartphones, personal computers and tablets, to grow fast in China this year, despite the COVID-19 epidemic.
Experts said Chinese companies are gradually returning to normal operations with the help of government measures, despite the downside pressure.
Zhang Wei, an analyst with Guosheng Securities, said industrial production showed improvement in March, suggesting a gradual recovery of the economy.
“Industrial production has been restored to a level which is basically the same as last year,” Zhang said.
Ying from China Minsheng Bank said pressure on the economy may concentrate over the next quarter and external headwinds may intensify, as the coronavirus epidemic is spreading globally.
“Despite the economic rebound, the country still needs to be better prepared in the next few months to one year to deal with the epidemic impact. The government should continue to take measures such as promoting economic restructuring and boosting the internet economy to hedge against the risks,” he said.
Ying said, due to the epidemic, industrial enterprises are facing new problems such as insufficient external demand, drop in orders and rising costs.
“China’s economy needs to rely increasingly on domestic demand instead of external demand to sustain growth. Meanwhile, it also needs to accelerate the push for moving up the value chain and cut its traditional reliance on low-end goods output,” said Ying.