According to a Reuters poll, manufacturing activity in China will fall at a slower pace in January than in December, with workers continuing to fall ill with the coronavirus after the government lifted austerity measures.Why is production cheaper in China?
The recurring wave of infections among the population has gone even faster than economists had expected, and so the disruption of production lines at factories continues. Even the Nikkei 225 Index has been affected.
Is China losing manufacturing
According to the average forecast of 25 economists, China’s official manufacturing PMI rose to 49.8 in January from 47.0 in December.
A reading above 50 indicates an increase in activity monthly and a reading below 50 indicates a contraction. The official manufacturing PMI, which focuses on large and state-owned companies, as well as a survey of the service sector, will be released Tuesday.
The National Bureau of Statistics pointed to the fact that after the “zero-tolerance” virus policy was lifted and the week-long Lunar New Year holiday that ended Friday, the COVID-19 infection among the labor force and seasonal plant closures are significantly affecting labor productivity this month.
China’s chief epidemiologist pointed out that 80% of people in China were infected with COVID-19 before the holidays, with the wave of infections moving through the country faster than economists expected and causing fewer disruptions.
However, China faces headwinds from demand, as Chinese export-oriented manufacturers are still seeing a shrinking order book amid fears of a recession. During the Lunar New Year holiday, consumption was up 12.2% year-on-year.
Earlier, we reported that demand in China’s smartphone market fell 13.2% year on year, to a ten-year low.