China's Manufacturing Crisis... Manufacturing PMI at 47.4 (Comprehensive)

Production Index, New Orders Index, and Employment Index All Plummet
Non-Manufacturing PMI Including Services Plunges Vertically to 41.9

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China's manufacturing sector has been directly hit by the COVID-19 Omicron variant.

China's National Bureau of Statistics announced on the 30th that the manufacturing Purchasing Managers' Index (PMI) for April was recorded at 47.4, lower than the previous month's 49.5.

Photo by National Bureau of Statistics of China

The manufacturing PMI is an indicator showing economic trends; a value above the baseline of 50 indicates an expansion phase, while below 50 indicates a contraction phase.

Following March, the manufacturing PMI has been below the baseline of 50 for two consecutive months, leading to analyses that the Chinese economy has entered a recession phase. The manufacturing PMI showed an expansion phase for four months starting from November last year but fell below 50 last month.

The large enterprise PMI remained at 48.1 in April, while the small and medium enterprise PMI was 47.5. It appears that small and medium enterprises are facing greater difficulties due to the resurgence of COVID-19.

The production index was recorded at 44.4, 5.1 points lower than the previous month, showing a significant slowdown in manufacturing production activities.

Additionally, the new orders index dropped to 42.6, 6.2 points lower than the previous month, indicating a contraction in market demand.

The employment index, used as an employment indicator, was only 47.2, 1.4 points lower than the previous month.

The non-manufacturing PMI reflecting the service sector's performance was 41.9 in April, threatening the 40-point barrier. The non-manufacturing PMI had recorded 48.4 the previous month, falling below 50 for the first time in seven months.

Photo by China National Bureau of Statistics

China's zero-COVID policy, including the Shanghai lockdown, appears to have impacted China's PMI.

There is growing weight to the forecast that achieving this year's targeted economic growth rate of around 5.5% may become difficult due to the resurgence of COVID-19.

Fearing further deterioration of the economic situation, even Chinese President Xi Jinping has stepped in. At the Communist Party Central Politburo meeting held the day before, President Xi assessed the current economic situation by stating, "The resurgence of COVID-19 and the Russia-Ukraine war, among other domestic and international factors, are challenging China's economy," and urged the use of various policy tools to strengthen macroeconomic policies and promote economic recovery.

President Xi particularly mentioned real estate, raising expectations that regulations on China's real estate market will be eased.

He also used the phrase "promoting the healthy development of the platform economy" during the meeting, leading to forecasts that regulations on platform companies may be somewhat relaxed. Large Chinese platform companies such as Alibaba have faced strong pressure from Chinese authorities since last year.

Earlier, at the 11th meeting of the Central Financial and Economic Affairs Commission, President Xi also instructed strengthening infrastructure investment. He emphasized, "Building a modernized infrastructure system is the foundation for the comprehensive construction of a socialist modern country," and called for a comprehensive reinforcement of infrastructure construction.

This content was produced with the assistance of AI translation services.