Moneycontrol PRO
you are here: HomeNewsWorld

China's factory activity shrinks as COVID hits economy

The Purchasing Managers' Index (PMI) -- a key gauge of manufacturing activity -- slid to 49.5, just below the 50-point mark separating growth from contraction, according to data from the National Bureau of Statistics.

March 31, 2022 / 09:13 AM IST

China's factory activity shrank in March, official data showed Thursday, as the country's worst Covid outbreak in two years brought sporadic lockdowns and factory closures.

The Purchasing Managers' Index (PMI) -- a key gauge of manufacturing activity -- slid to 49.5, just below the 50-point mark separating growth from contraction, according to data from the National Bureau of Statistics.

That marked the first contraction in five months and was lower than expectations from economists polled by Bloomberg.

The fall comes as authorities struggle to stamp out coronavirus outbreaks with restrictions and lockdowns on key manufacturing hubs such as Shenzhen in the south and Changchun in the northeast.

"Recently, clustered outbreaks have occurred in many places in China," NBS senior statistician Zhao Qinghe said in a statement Thursday.

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more

"Coupled with a significant increase in international geopolitical instability, the production and operation activities of Chinese enterprises have been affected," he added.

For weeks China has recorded thousands of virus cases each day, after nearly two years of virtually extinguishing infections within its borders.

That has rattled its "zero-Covid" strategy.

Some companies temporarily reduced or stopped production because of Covid, which also hit logistics flows.

The non-manufacturing PMI also plunged, to 48.4 from 51.6, with the service industry significantly hit by the virus outbreak.

Nomura chief China economist Lu Ting expected PMIs to drop further "on escalated lockdowns and social distancing measures".

"Beijing’s determination in maintaining its zero-Covid-strategy for fighting the infectious Omicron variant will very likely deal a severe blow to the Chinese economy," he told AFP.

first published: Mar 31, 2022 09:13 am