China factory activity shrinks more than expected amid high Covid infection rate

China's factory activity shrinks in November due to strict Covid policy.

A key measure of China’s factory activity has further fallen in November, according to official figures. The Purchasing Managers’ Index (PMI) fell to 48 from 49.2 in October.

It comes as strict Covid restrictions and weakening global demand weigh on the world’s second largest economy.

In recent days there have been violent protests against President Xi Jinping’s zero-Covid measures that have seen major cities being put into lockdowns.

The non-manufacturing PMI – which measures business sentiment in the services and construction sector, also fell to 46.7 versus 48.7 in the previous month – the lowest reading in seven months.

Any number below 50 indicates a contraction compared to the previous month.

Earlier this month, the government introduced a series of measures to prop up its slowing economy. Last Friday, China’s central bank changed its reserve ration for banks which gives lending institutions more cash to extend loans. This was seen as a positive move to help the struggling real estate sector.

China has seen Covid-19 cases spike in recent weeks, with more than 37,000 cases reported on Tuesday – exceeding its previous peak in April.

Frustration has turned into anger among students and workers over the country’s strict zero-Covid policy.

Last weekend, thousands in China took to the streets demanding an end to the strict measures – with some even making rare calls for President Xi Jinping to stand down.

On Tuesday, Chinese health officials said the authorities would work to reduce “inconvenience” caused by the Covid pandemic.

Mi Feng, spokesperson of China’s National Health Commission (NHC), told reporters that lockdowns should be “imposed and eased quickly” and that “excessive control measures should be continuously rectified”.

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