The decline in Chinese manufacturing is putting further strain on the country’s economy
An official survey released on Monday revealed that China’s manufacturing sector contracted in October, adding to the downward pressure on the economy as the ruling Communist Party attempts to reverse a recession.
According to the government statistics agency and an official industry body, the monthly purchasing managers’ index dropped to 49.2 from September’s 50.1 on a scale of 100 points, where figures below 50 imply activity decreasing.
The National Bureau of Statistics and the China Federation of Logistics & Purchasing reported that production, new orders, and employment dropped.
The data confirmed that worldwide demand for exports would slow in late 2022, which, along with recurrent city shutdowns in China to combat virus outbreaks, would have a negative impact on consumer spending.
Data “suggest to a further loss of momentum this month as virus disruptions increased and export orders remained under pressure,” wrote Zichun Huang of Capital Economics.
After economic growth slowed to 2.2% in the first half of 2022, the ruling party is attempting to reverse the downward trend. To achieve this goal, it is aiming to keep the same strict stance on debt that has stifled the real estate market and so the economy as a whole.
In the three months ending in September, economic growth jumped back up to 3.9% from 0.4% in the preceding quarter. Unfortunately, retail sales growth slowed to 2.5% in September from 5.4% in August.
Meanwhile, export growth slowed to 5.7% from 7% in August, reflecting a general slowdown in the global economy. China’s poor demand is reflected in a 0.3% increase in imports.
This year is expected to have China’s annual growth at as low as 3%, which would be the second-weakest since at least the 1980s, according to forecasters.