(Beijing) Manufacturing activity in China experienced an unexpected rebound in January after four months of contraction, thanks to a recovery in activity since the lifting of health restrictions which were penalizing the economy.
After three years of draconian measures, the Asian giant, the world’s second largest economy, abruptly lifted in December most of its restrictions against COVID-19 which weakened its economy and aroused the anger of part of the population.
The activity initially struggled to revive, due to an explosion in the number of patients in the days and weeks following the decision.
But the continued decline in the number of patients in recent days has since favored the recovery.
In this context, the Purchasing Managers’ Index (PMI), a reflection of the health of the industrial world, stood at 50.1 points in January against 47 a month earlier, announced the National Bureau of Statistics ( SNB).
This is the first time since September that this index has been in positive territory.
A figure above 50 indicates an expansion in activity, and below that indicates a contraction.
Analysts expected a further decline (49.7).
Gradual recovery
This rebound in manufacturing activity is all the more surprising given that China was shut down for a week in January due to the Lunar New Year holiday.
Prevention measures against the epidemic have “entered a new phase” which allows “a gradual return” to normal life, said Zhao Qinghe, statistician of the BNS, in a press release.
The so-called “zero COVID-19” health policy was based on generalized screening tests, strict monitoring of movements, but also on confinements and the placement in quarantine of positive people.
These measures, which led to the unexpected closure of factories, disrupted supply chains and forced some companies to close permanently.
The lifting of restrictions in January allowed an “improvement of supply chains”, note in a note from analysts at Nomura bank.
For its part, the non-manufacturing PMI, which includes the services and construction sector, experienced a strong rebound this month, to 54.4 points, against 41.6 in December.
The BNS attributes this acceleration in activity in part to the Lunar New Year holidays, conducive to consumption and the tourism sector.
“The return of consumers to the streets has boosted services, while labor shortages have eased in industry,” said analyst Sheana Yue of Capital Economics.
“In the rear view mirror”
“With zero COVID-19 in the rearview mirror, the recovery should remain robust in the short term,” she said.
The International Monetary Fund (IMF) on Monday raised its growth forecast for China this year to 5.2%, from 4.4% previously.
“The rebound should be most impressive in the first quarter,” warn analysts at MacroPolo, a US-based think tank specializing in the Chinese economy.
But “the big question” is to know “by what measures” the power counts on the long term “to revive growth”, wonders Zhiwei Zhang, of the firm Pinpoint Asset Management.
China saw its gross domestic product (GDP) grow by 3% in 2022.
This pace, which would make many the envy of most major economies, is nonetheless one of the lowest in 40 years for the Asian giant.
Beijing had set itself a target of 5.5%, a rate already much lower than the performance of 2021, when China’s GDP had grown by more than 8%, driven by the recovery after the first epidemic wave.
