Manufacturing slips but recovery on track
Experts call for stepped-up support to help enterprises hit hard by COVID disruptions
China’s manufacturing activity contracted in April due to a resurgence in domestic COVID-19 infections coupled with uncertainties brought about by geopolitical tensions.
Experts called for stepped-up policy support to help hard-hit enterprises resume production, smoothen logistic channels and ensure the stability of industrial and supply chains to further invigorate the economy and shore up market confidence.
The production and operation of enterprises will gradually improve as the pandemic increasingly comes under better control along with the government’s vigorous measures to stabilize economic growth, they added.
The purchasing managers’ index for China’s manufacturing sector came in at 47.4 in April, down from 49.5 in March, marking the lowest reading since March 2020, data from the National Bureau of Statistics showed on April 30. A PMI reading above 50 indicates expansion, while a reading below that number reflects contraction.
The sub-index for production stood at 44.4 in April, down 5.1 percentage points from the reading in March. The sub-index for new orders came in at 42.6 versus 48.8 a month earlier.
Many enterprises have reported rising difficulties in logistics and transportation, the supply of key raw materials and components, sales of finished products, and inventory backlogs, said Zhao Qinghe, a senior statistician with the NBS.
However, high-tech manufacturing and consumer goods manufacturing remained relatively stable, as the PMI for high-end manufacturing stood at 50.1, a slight decline of 0.3 percentage points from March and staying in expansionary territory. Its sub-index for production increased 1.1 percentage points from the previous month.
China’s non-manufacturing PMI was at 41.9 in April, down from 48.4 in March. The resurgence in COVID-19 cases affected the services sector the most in April, as 19 of the 21 segments surveyed, such as transportation, catering and accommodation, were in the contraction range.
“The fundamentals of China’s longterm sound economic growth have not changed, and the related departments have further coordinated the epidemic prevention and the smooth supply of goods, stepped up policy support to help enterprises tide over difficulties, which helps boost business confidence,” Zhao said.
Noting that China’s economy is still confronting the triple pressure of demand contraction, supply shocks and weakening expectations, Wen Bin, chief researcher at China Minsheng Bank, said the country should ratchet up efforts to help companies resume operations in regions hit hard by the pandemic, and stabilize industrial and supply chains.
More efforts should be made to expand domestic demand, promote infrastructure construction, and bolster consumption to keep the country’s economy running within a reasonable range, Wen added.
A meeting of the Political Bureau of the Communist Party of China Central Committee on April 29 stressed the importance of economic stability and securing and improving people’s livelihoods.
As China continues to take strict epidemic prevention and control measures, it has made solid efforts to smoothen transport and logistics services, and accelerate the building of a unified domestic market.