China's manufacturing activity contracted in April amid COVID-19 resurgence

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China's manufacturing activity contracted in April amid COVID-19 resurgence

SAIC employees inspect cars on an assembly line in Shanghai in February. China's manufacturing activity contracted in April due to the resurgence of domestic COVID 19 infections, coupled with uncertainties brought about by geopolitical tensions.

Experts said that policy support should be stepped up to help hard-hit enterprises resume production, smoothen logistic channels and ensure the stability of industrial and supply chains to invigorate the economy and shore up market confidence.

The production and operation of enterprises will gradually improve as the pandemic comes under better control, along with the government's vigorous measures to stabilize economic growth, they added.

In April, the purchasing managers' index for China's manufacturing sector was down from 49.5 in March, marking the lowest reading since March 2020, according to data from the National Bureau of Statistics. A PMI reading above 50 indicates expansion, while a reading below that number indicates contraction.

The sub-index for production was at 44.4 in April, down 5.1 percentage points from the reading in March. A month earlier, the sub-index for new orders was 42.6 versus 48.8 a month ago.

Many enterprises have reported difficulties with logistics and transportation, the supply of key raw materials and components, sales of finished products, and inventory backlogs, said Zhao Qinghe, senior statistician with the NBS.

As the PMI for high-tech manufacturing stood at 50.1, a slight decline of 0.3 percentage points from March and kept in expansionary territory, the high-tech manufacturing and consumer goods manufacturing remained relatively stable. Its sub-index for production increased by 1.1 percentage points from the previous month.

The resurgence in COVID 19 cases impacted the services sector the most in April, as 19 of the 21 segments surveyed, such as transportation, catering and accommodation, were in the contraction range.

The basics of China's long-term sound economic growth have not changed, and the related departments have further coordinated the epidemic prevention and smooth supply of goods, and also increased policy support to help enterprises tide over difficulties, which helps boost business confidence, he said.

As China's economy is still facing the triple pressure of demand contraction, supply shocks and weaker expectations, Wen Bin, chief researcher at China Minsheng Bank, said the country should ratchet up efforts to help companies resume operations in regions hit hard by the epidemic, ensure smooth operation of logistics, and stabilize industrial and supply chains.

Wen said that more efforts should be made to expand domestic demand, promote infrastructure construction and boost the recovery of consumption to keep the country's economy in a reasonable range.

The Political Bureau of the Communist Party of China Central Committee met on Friday and stressed the importance of economic stability and securing and improving people's livelihoods, as the country's economy faces growing complexities and uncertainties.

As China continues to take strict epidemic prevention and control measures, it has taken good steps to smoothen transport and logistics services, and build a unified domestic market.