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China Manufacturing Bounces Back on Easing Covid Curbs

The Caixin/Markit manufacturing purchasing managers’ index (PMI) rose to 51.7 last month from 48.1 in the previous month, well above analysts’ expectations of 50.1.

The Chinese economy's recovery is not solid, Premier Li Keqiang said.
An employee measures a newly manufactured ball mill machine at a factory in Nantong, Jiangsu province. Factories will benefit less than retail sales as 70% of factories were in operation even during the lockdowns as they could operate in closed-loop environments. File photo: Reuters.


China’s manufacturing bounced back in June, growing at its fastest in 13 months, amid a robust revival in production following the lifting of Covid lockdowns, a Caixin survey showed.

The Caixin/Markit manufacturing purchasing managers’ index (PMI) rose to 51.7 last month from 48.1 in the previous month, well above analysts’ expectations of 50.1.

The 50-point index mark separates growth from contraction on a monthly basis.

The recovery suggested in the Caixin survey, which focused on more export-oriented and small firms in coastal regions, was more convincing compared with findings in an official survey.

Economic activity, especially manufacturing in China, has sped up in June since various Covid lockdowns have been rolled back as cases fell, with a range of support measures unveiled by the State Council in late May to stabilise growth gradually kicking in.


New Orders Grow At Fastest in Four Months

A sub-index for production bounced to the highest level since November 2020, while new orders, bolstered by the first increase in export orders in about a year, snapped three months of decline and posted the fastest growth in four months.

Delivery times for suppliers stabilised in June amid easing supply chain snags, after worsening for the past two years.

However, despite the strong rebound, factories remained cautious in terms of hiring more staff, with employment falling for the third month in a row.

“Restoration in the post-pandemic era remained the focus of the current economy, yet its base was far from strong,” Wang Zhe, a senior economist at Caixin Insight Group, said.


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“Deteriorating household income and expectations caused by a weak labor market dampened the demand recovery. Correspondingly, supportive policies should target employees, gig workers and low-income groups impacted by the outbreaks.”

China’s economy has started to chart a recovery path out of the supply shocks caused by strict lockdowns, but headwinds persist, including a record high jobless rate in big cities, a still subdued property market, soft consumer spending and fear of recurring waves of infections.

Analysts expect further improvement in economic conditions in the third quarter, although the official GDP target of around 5.5% for this year will be hard to achieve unless the government abandons its zero-Covid strategy.

President Xi Jinping defended the zero-Covid policy on Tuesday, saying China is willing to accept some temporary impact on economic development over harm to people’s health.


  • Reuters with additional editing by Jim Pollard





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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.


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