China’s economy is developing positively – Taipei Times

Recovery remains fragile as the country sticks to its ‘zero COVID’ strategy, meaning restrictions could be tightened if Omicron outbreaks break out again

China’s economy showed further signs of improvement last month with strong gains in services and construction as COVID-19 outbreaks and restrictions were gradually eased.

The official Purchasing Managers’ Index (PMI) for the manufacturing sector fell from 49.6 in May to 50.2, the Chinese National Bureau of Statistics (NBS) said yesterday, slightly below the median estimate of 50.5 in a survey of economists.

It was the first time since February that the index was above 50, indicating an expansion in production from May.

Photo: AFP

The non-manufacturing gauge, which measures activity in the construction and service sectors, climbed to 54.7, the highest in more than a year and well above the consensus forecast of 50.5.

“China’s economy bottomed out in June and the recovery is fundamentally entrenched, although attention still needs to be paid to imbalances between supply and demand recoveries,” said the China Logistics Information Center, which publishes PMI figures in partnership with the BNS.

Government restrictions aimed at containing COVID-19 outbreaks have gradually eased over the past month. Shanghai’s financial hub lifted its two-month lockdown early last month allowing more stores to reopen, more factories to resume production and port operations to resume.

The data suggests that “the pace of recovery has accelerated as the COVID-19 situation has stabilized,” NatWest Group PLC China chief economist Liu Peiqian (劉培乾) said.

There was a “widespread but still soft recovery in production and new orders”, and the figures show the rebound is even softer compared to the recovery from Wuhan’s 2020 lockdown, she said. .

Nineteen of the 21 service sectors tracked in the survey returned to expansion last month, down from just six the previous month, NBS senior statistician Zhao Qinghe (趙清河) said in a separate statement.

The gauges of sectors previously hard hit by the outbreaks have all improved, such as rail transport, air transport, accommodation, restaurants and entertainment.

However, the recovery remains fragile as the country sticks to its “zero COVID” strategy, which means restrictions could be tightened if outbreaks of the highly transmissible Omicron variant of SARS-CoV-2 break out again.

Chinese President Xi Jinping (習近平) said the policy was the most “economical and efficient” for the country.

Economists are firmly sticking to their GDP growth forecasts for this year. Growth is expected to be 4.1%, well below Beijing’s annual target of around 5.5%.

Bloomberg’s aggregate index of eight leading indicators showed some improvement last month, although the recovery remains muted.

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